Much shorter extension at NEC-OSN-97/2

Vol 7, PW 10 (30 Jul 03) Exploration & Production

UNLIKE BLOCK KG-DWN-98/3, Reliance has only received an eight and a half month extension at NEC-OSN-97/2, on India's northeast coast.

Like KG-DWN-98/3, 'Phase-I' of the minimum work programme at NEC-OSN-97/2 ended on 7th June. Reliance wanted a year's extension so that it could complete the work programme in 'Phase-I' where it had committed to reprocess 2,000-km old 2D; acquire, process and interpret 1,000-km fresh 2D as well as 500-sq km fresh 3D; carry out technical assessment and geological modelling of 5,000-km 2d and 500-sq km 3D; and drill one well to 5,000 metres.

However, Reliance could only carry out the 'geoscientific' work. One of the reasons Reliance couldn't drill the exploration well was that it did not get the mandatory approval in time from the environment ministry.

Also, it missed the all-important weather window and had to wait for the next one. On this block also, Reliance received the PEL after a delay of more than three months.

Despite this, Reliance spent a total $15.3m on this block by the end of March 2003 against a 'Phase-I' commitment of only $12.4m. We understand "special" processing and interpretation of seismic data shot on this block has, "indicated highly prospective areas with technological challenges." In principle, the DGH had no problem agreeing to Reliance's request for a 12-month extension to 'Phase-I' because the "operator in spite of his best efforts and due to reasons beyond his control like availability of fair weather window for a limited time; loss of time due to late issuance of PEL; and non-availability of environment ministry clearance could not drill the well to fulfil the minimum work programme obligation even though other obligations have been over-fulfilled.

Despite this, the DGH feels an eight-and-a-half month extension is enough on this block. As with all such extensions, the period of extension will be adjusted against the period allowed for 'Phase-II'.

Oil India owned this block before Reliance andhad drilled several wells without much success due to, "geological complexities and drilling problems arising due to high pressure and mod losses."