Essar/ONGC resolve CB-ON/3 deadlock

Vol 18, PW 26 (27 Aug 15) News in Brief

At its next Board meeting sometime in mid-September ONGC is expected to clear the way for Essar Oil to begin field development work at the 119-sq km CB-ON/3 Mehsana block in north Gujarat, where it has two crude oil discoveries at the ENP and ENS fields.

Essar has been prevented from developing the block because the mining lease must be requested by the original licensee, in this case ONGC, which thinks the block is not commercial. But the ministry has finally resolved the long-pending dispute, festering since 2010, by asking ONGC to apply for the lease on condition Essar reimburses administrative costs.

ONGC’s Board is now set to approve its decision to accept Rs5 lakh ($7600) as annual administrative costs even though it was earlier fighting for Rs19 lakh ($28,000). Essar can then re-enter its discoveries, expected to produce up to 100 b/d yielding roughly $1.8m in annual revenues.

Essar estimates the block has 2.71m barrels of oil and 1.58-bcf gas in-place.

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