Santos learns that leaving India is hard

Vol 19, PW 26 (08 Sep 16) News in Brief

Australia's Santos might have been hoping for a smooth exit from India but the oil ministry has other plans.

Santos thought it would be exempt from paying a penalty to exit exploration blocks NEC-DWN-2004/1 and NEC-DWN-2004/2 where Bangladeshi gunboats forced it to stop shooting seismic in 2009 over a border dispute. But last week the oil ministry had a meeting to discuss the relinquishment and decided Santos must pay the annual Rs3cr ($0.5m) PEL fee for the last two years in order to be exempt from paying a penalty.

"The block should be active for an operator to benefit from a relinquishment policy," we hear. "For a block to remain active, the operator should pay the PEL fee." In October 2014, the Cabinet Committee of Economic Affairs announced a policy allowing operators to relinquish blocks without paying a penalty for the unfinished work programme.

Operators could exit blocks if permission to explore was denied by environment and defence ministries. Expect Santos to protest any demand to pay a PEL fee or penalty.