HOEC denies 'cash crunch' affecting PY-1 work
Eni-affiliate Hindustan Oil Exploration Company (HOEC) has dismissed market rumours it is delaying development work at its PY-1 gasfield because of a funds shortage.
“We have a very strong balance sheet,” said a senior company source, when contacted. “Our fundamentals are strong and we’re committed to fulfilling the work programme at our blocks.
” Rumours of BSE-listed HOEC facing a ‘cash-crunch’ began circulating when it shut down production at the 75-sq km PY-1 field, which sits in water depths of 76 metres offshore Puducherry, between July 10 and August 17 this year. PY-1 was previously producing up to 1.3m cm/d of gas from three wells.
But since production resumed in August, productions has dropped sharply to 900,000 cm/d from two wells. “PY-1 production is less than expected because of ‘water cut’,” claims an industry source.
“HOEC must drill more wells to ramp up production to earlier levels, but doesn’t have money for this.” HOEC admits PY-1 has “water ‘ingress’” but claims this is not unusual.
It also denies allegations it is holding up development. “We’ve submitted a comprehensive development plan to the DGH which includes drilling additional wells,” says HOEC.
“We’re talking to them (DGH officials) regularly and will drill ‘intelligent multi-lateral’ wells once our plan is approved. But we can’t say when the DGH will give its approval.
” HOEC confirms that ‘effective gas production’ at PY-1 is 900,000 cm/d from two wells, but blames this on “lower gas off-take” by its sole customer, a 330-MW ‘combined cycle’ power station in Tamil Nadu’s Nagapattinam district run by PPN Power. “(Independent power producer) PPN is taking less gas because it faces problems with ‘electricity load dispatch’ to (state-owned) Tamil Nadu Electricity Board,” we are told.
But another industry source insists lower gas off-take by PPN means HOEC is earning lower revenues.
