Choubey proposes attractive 2D 'spec' terms

Vol 16, PW 8 (01 Nov 12) People & Policy

A groundbreaking proposal by DGH director general RN Choubey could allow seismic contractors to keep all profits generated from selling future speculative 2D surveys off India’s coast.

PETROWATCH learns Choubey is expected to issue new guidelines on speculative 2D by March 2013 in line with suggestions from seismic contractors Schlumberger, PGS and TGS-NOPEC. One key proposal is the DGH will stop sharing in any profit generated from a speculative 2D survey.

Choubey and eight DGH officers from the finance, G&G, material management and other departments heard separate three-hour presentations on October 15, 16 and 17. “I am impressed with Choubey,” says a source.

“He asked relevant questions, unlike some of the other DGH people with him.” It’s a shame no previous DG has been as progressive, he adds, as speculative 2D shoots are vital if the government is to carve out blocks for future licensing rounds.

“Sibal (a former DG) insisted on profit sharing,” adds a source. “Contractors were forced to add the DGH’s share to data cost, making it expensive.

” Sibal also courted controversy when he allegedly favoured US-based GX Technologies by writing to E&P companies, extolling the quality of its speculative 2D. He was less favourable to Norwegian contractor PGS when it shot 7329-lkm 2D off the Andaman Islands in 2008.

Here, the DGH refused full cost recovery, questioning the quality of the data. PGS spent $15m to shoot the 2D but recovered only $3m from one sale to ONGC.

Choubey is yet to decide on a request by Schlumberger to allow 10 to 15 years of marketing exclusivity to enable contractors to recover costs.