DGH summons Hardy to explain PY-3 shutdown

Vol 15, PW 3 (11 Aug 11) Exploration & Production

PY-3 production offshore Chennai has been ‘shut in’ for nearly two weeks now and there’s no sign of it resuming anytime soon.

PETROWATCH learns UK-listed operator Hardy Oil & Gas ceased oil production of 3000 b/d at midnight on July 30. On August 2, concerned DGH director general SK Srivastava summoned representatives from Hardy, including chief executive Yogeshwar Sharma, and a team from consortium partner ONGC to DGH headquarters in Delhi for talks.

“Srivastava expressed his unhappiness at the suspension of PY-3 production,” we hear. “He asked Sharma outright if Hardy was unable to operate the field effectively.

” Sharma responded that production had to be suspended on July 30 as Chennai-based Aban Offshore had failed to renew its American Bureau of Shipping (ABS) certification for floating production unit Tahara and tanker Endeavour. Srivastava then reportedly asked Sharma to answer the DGH’s queries on the pending Phase-III field development plan for PY-3 and to resume production within a week.

Tahara and Endeavour have been deployed at PY-3 uninterrupted since 1997. But on June 29, two government nominees on the block’s management committee (one from the oil ministry and one from the DGH) queried consortium plans to renew Aban’s contract for Tahara and Endeavour for five years without inviting a tender.

The MC also blocked the carefully thought-out Phase-III development plan for two new wells. At the next MC meeting on July 29, the Phase-III development plan was again rejected.

“Only if the MC had approved the development plan could we have committed to extending Aban’s contract,” explains a source. “Aban was unwilling to extend ABS certification for Tahara and Endeavour without a firm commitment that its contract would be renewed.

” But PY-3 partners are unwilling to promise anything unless the Phase-III development plan is approved by the MC.