Compressor row at Hazira deepens into open rift

Vol 8, PW 3 (05 May 04) Exploration & Production

Disagreement between the ministry and a consortium of Niko Resources and Gujarat Petroleum over high pressure compressors at the Hazira gasfield is deepening.

A ministry source questions several basic premises of operator Nikos public position on this issue. There was no Management Committee approval for the compressors, he said.

No MC meeting was held at all. He said the DGH issued a letter allowing Niko to import four compressors but Niko said we do not recognise the DGH on this issue.

They wanted a MC resolution, but before any MC meeting could be held, DGH withdrew its letter. We are told the DGH issued and withdrew the letter granting permission within a week.

We fail to understand how they got the compressors within such a short time and that too before MC approval. We understand the ministry is clear that if Niko and GSPC want the compressors to support Gujarat Petronets gas grid then the issue is unconnected with the PSC and not cost recoverable.

But if they want the compressors to boost pressure in the 36-inch Hazira-Mora pipeline then the issue is open to arbitration. Why During the (ongoing) arbitration (over pipeline ownership) they said that a big diameter pipeline is being laid between Hazira and Mora to maintain low pressure as the pipeline passes through areas inhabited by people.

In short, the ministry wants Niko to explain why it now wants high pressure compressors as well as a 36-inch pipeline, because during the pipeline arbitration Niko argued for a low-pressure big diameter pipeline. As of now, the DGH has not approved the Hazira development plan submitted by Niko.

As against 14 wells and one platform proposed by Niko, DGH has approved only one platform and six wells. Approval for the full development plan was withheld because, the DGH wanted to go cautiously and see the results of the initial development wells on the production profile.

Ministry officials believe their position is legally sound. Theres no question of the DGH allowing Niko to import compressors under the PSC.

Its for Niko to make the next move.