DGH questions Niko reserves for NSA gasfield

Vol 7, PW 16 (22 Oct 03) Exploration & Production

Another spot of good luck for Nikos onland Gujarat NELP-II block CB-ONN-2000/2.

Last month the DGH approved Niko's 'Declaration of Commerciality' for the NSA gasfield that sits within this block, alongside Bheema. But the DGH disputes the reserves figures submitted by Niko in its 'Declaration of Commerciality' for NSA.

PETROWATCH learns Niko has delineated a 20-sq km area of the NSA gasfield and estimates, "most likely recoverable gas reserves of 28bn cubic feet within two sands." According to Niko, gas production will be from shallow depths of between 200 and 300 metres from 12 wells - six of which have already been drilled. Unconvinced, the DGH responds.

"Our analysis shows that recoverable gas reserves are well below what Niko is projecting. What is the DGH estimates "We can't give you the actual figures.

We don't give them even to Niko, but they are well below Niko's figures. He adds: Private companies probably have other ideas in mind when they send in such figures." If the DGH disputes Niko's numbers, why did it approve the company's 'Declaration of Commerciality' "For the government, even producing at our lower figures will be profitable." According to the DGH, a 'Declaration of Commerciality' is "no big deal".

Adds a source: "Declaration of commerciality is only a minor step. It means Niko can submit a development plan.

It is the development plan that is important. Niko has also submitted a development plan for the NSA gasfield but the DGH wants more details before approving it.

"We have asked them for more technical inputs. They have to carry out several studies such as an environmental impact assessment and a land subsidence study.

Once we have all these details we will carry out our own analysis of the feasibility of their development plan." Niko estimates the NSA gasfield will have a commercial life of 10 years producing an average 11m cubic feet per day gas at a cost of $14.65m. Niko believes the NSA gasfield could generate net revenues of between $84m and $140m and yield between $9.7m and $28.2m profit petroleum for the government.