Greatship Chetna will sail into PMT cost row

Vol 15, PW 16 (23 Feb 12) Exploration & Production

Drilling rig Greatship Chetna is expected to mobilise at the offshore Panna, Mukta and Tapti (PMT) fields next month (March) amid fears its arrival could trigger another dispute between the consortium, the DGH and the oil ministry.

Chetna is meant to begin an 18-month contract to drill seven wells at Tapti and 10 wells at Panna. But PMT joint operators British Gas, ONGC and Reliance are yet to receive ministry approval to make the seven proposed Tapti wells cost-recoverable.

Still, the consortium is determined to go ahead with drilling, as it believes it can recover costs later by filing an arbitration case against the ministry. Why is the ministry refusing Tapti cost recovery Blame a lingering $364m dispute over unapproved spending at the field, already the subject of an arbitration case filed by the ministry back in 2010.

At the last MC meeting on September 15, 2011, (then) ONGC director offshore Sudhir Vasudeva blocked the $325m budget for the seven proposed Tapti wells, despite protests by BG and Reliance. ONGC’s representative on the PMT operator board – MS Rawat – later approved the consortium’s decision to hire Chetna on December 27 for a $130,000 day rate.

“Rawat should have checked with ONGC if the Tapti budget was approved at the last MC meeting,” says an incredulous source. “But for some reason he didn’t.

” There’s also brewing trouble with Chetna’s proposed Panna drilling programme. It seems marine warranty surveyor Noble Denton is unsure if Chetna is suitable for the soft soil at six Panna drilling locations near the PL platform.

Rig owner Greatship is worried and doesn’t want to take a risk, which means plans to drill these six Panna wells might have to be abandoned. Even if the Tapti wells get drilled, Chetna might end up sitting idle for 11 months of her PMT contract.