ONGC demands $58m from Niko for Surat exit

Vol 17, PW 7 (31 Oct 13) People & Policy

ONGC is doing its best to block Canadian explorer Niko from relinquishing Surat block CB-ONN-2000/2 until it pays $58m for allegedly draining the adjacent Olpad field.

Since 2009, ONGC claims Niko over produced by about 210m cubic metres, or $58m (Rs360cr) worth of gas, from the Kand formation at the NELP-II block, leading to dropping pressure at ONGC’s adjoining pre-NELP Olpad field. ONGC wrote to oil ministry joint secretary Aramane Giridhar on September 30, reiterating its claim that Niko produced 525m cubic metres against its share of 315m cubic metres.

A ministry official tells PETROWATCH: “We are in the process of allowing Niko to relinquish the block but they will not be freed from contractual obligations. The DGH is examining data provided by ONGC and Niko as a neutral agency and we will ask Niko to pay up if the DGH finds it liable.

” A Niko source maintains the volume of hydrocarbons extracted was in line with the Field Development Plan (FDP) cleared by the DGH. “ONGC can say what it wants," says Niko.

"There were two pockets in the Kand formation. One was given to ONGC and one to us.

We produced our share and shut production in November 2012.” Niko claims its production was within the estimated total recovery of 19.07-bcf stated in the FDP, a figure disputed by ONGC.

A senior ONGC source claims the DGH is colluding with Niko to cover up a flawed FDP that permitted over-extraction.