CBM penalty policy

Vol 15, PW 17 (08 Mar 12) News in Brief

Companies anxious to know how much penalty they will have to pay for unfinished work programmes at relinquished CBM exploration blocks will find out within the next two months.

By then the oil ministry hopes to fix a uniform penalty for unfinished CBM wells, irrespective of the diverse challenges encountered at each block. DGH officials plan to average the different drilling costs reported by CBM block operators to arrive at an appropriate uniform cost.

“The penalty for each unfinished CBM well could be fixed at between Rs4cr ($790,000) and Rs4.5cr ($890,000),” says a government official. “If any operator objects we’ll just tell them to go and complete their MWP (Minimum Work Programme)!” A penalty of just Rs4cr/well will be good news for ONGC, which claims it spends up to Rs8cr/well ($1.6m).

But it’s unlikely to be welcomed by the likes of Australian explorer Dart Energy, which says it only spends Rs2.5cr ($500,000) on each CBM well.

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