Cairn cancels Ravva platform tender

Vol 16, PW 26 (25 Jul 13) Exploration & Production

Cairn India last week inexplicably cancelled an eagerly-awaited offshore platform tender for the Ravva field.

Last week (July 17) Cairn wrote to lowest bidder Hyderabad-based SEW and partner PT Gunanusa of Indonesia announcing that the tender for the Contingent Resource Development (CRD) one-wellhead platform and associated pipelines project was cancelled until further notice. No reason was offered.

Cairn's move is unusual as a senior oil ministry source told PETROWATCH on July 18 the project has government sanction to proceed. "Cairn has been told that we are allowing the project to go ahead,” confirms our ministry source.

This CRD project, he adds, falls within the government's 'exploration within mining lease area' policy announced in February where companies can explore areas already producing oil or gas. Taking advantage of the new policy Cairn wants to extract 4.3m barrels of oil and 20bn cubic feet of gas (600m cubic metres) from the RX-1, RX-3, RX-8Z and R-13 discoveries made in 2004-05 sitting in water depths of around 15 metres.

Under the PSC Cairn should have submitted a Declaration of Commerciality (DOC) within two years of discovery but didn’t because development would have been unviable at the low oil prices prevailing in 2004-05 of around $39/barrel. Today Ravva crude fetches $100/barrel, prompting Cairn to seek DGH permission to implement the $62m project.

The oil ministry objected, saying Cairn should first carry out a pre-FEED study. Cairn, however, says a pre-FEED is not required.

Still unclear is whether Cairn and the ministry have resolved this disagreement.