HOEC to buy BG stake in Gujarat block CB-OS-1
HINDUSTAN OIL Exploration Company will soon be the new operator and majority stakeholder in offshore exploration block CB-OS/1 in Gujarat.
We understand HOEC is in the final stages of acquiring a 62.64% stake held by its partner British Gas. Industry sources tell this report HOEC and BG should have concluded the deal by the time this issue of PETROWATCH reaches your desk.
When through, HOEC's stake in CB-OS/1 will rise to 80%. Tata Petrodyne and ONGC each hold 10%.
But HOEC still needs a No Objection Certificate (NoC) from both Tata Petrodyne and ONGC. We understand ONGC sees no problem in letting HOEC buy the BG stake but Tata Petrodyne might take some convincing.
"Talks are going on between HOEC and Tata Petrodyne about this," says our source. Once the Tatas approve, Shastri Bhawan must approve the assignment of stake and operatorship to HOEC as well as the new development plan - both are expected without much fuss.
In the unlikely event that Tata objects, the consortium will return the block to the ministry. CB-OS-1 has an unexciting record.
'Phase-I' of the exploration phase ended in November 2002 and saw the drilling of seven wells. Four of these were drilled in 1998-99 and turned out to be dry holes.
Of the three drilled in 2002, Vagra-1 and Vagra-2 were dry holes. "These were good sands but BG hit water." Only the third well at South Harinagar encountered good sands and a flow rate of 1,500 b/d but "this too watered out later".
In September a disappointed BG decided not to assume 'Phase-II' and said it wants to quit the block.