EnQuest negotiates D-18 RSC terms with DGH

Vol 20, PW 17 (18 May 17) Exploration & Production

Delhi-based EnQuest and the DGH are negotiating contract terms for D-18 - one of the most promising fields auctioned under the Discovered Small Fields (DSF) round.

Still to be signed is the Revenue Sharing Contract (RSC) and if no consensus is reached the field will in all likelihood be offered again under the next round, expected in September. "EnQuest hasn't signed the contract because of a disagreement over a revenue sharing clause," says a source.

"The clause stipulates that the DSF winner must pay the government's revenue share at either the actual rate or a rate linked to an Indian basket of crude, whichever is higher." EnQuest is unhappy because oil produced at D-18 is waxy and 10% cheaper than prevailing oil prices. "Linking the government's share to the Indian crude basket will make the project unviable," we hear.

EnQuest made representations to the DGH and ministry about this "ambiguity" even before winning the field. For the upcoming DSF-2 and HELP rounds, the disputed clause has now been removed.

EnQuest and partner Haryana City Gas have 90 days from the date of award or till mid-June to sign the RSC and are offering 38%-42% revenue share to the government. D-18 can "easily" produce more than 4000 b/d, says a source.

EnQuest won the block with a 12 development well commitment - the highest pledged in this round, where contracts were signed on March 27.