Niko and GSPC begin oil production from Hazira

Vol 10, PW 1 (04 May 06) Exploration & Production

Niko Resources and GSPC have begun producing oil from the offshore Hazira gasfield.

PETROWATCH learns commercial sales began on 1st April with 800 b/d to Indian Oils refinery at nearby Koyali. For now production is from one offshore well only but one more offshore producer will shortly begin yielding oil.

These two wells plus one water injector should raise production to 1250 b/d. GSPC and Niko plan to drill the same number of wells onshore before the end of the year after collating information from the offshore oil producers.

Production will drop from the present offshore wells, we learn. Thats when the onshore wells will come into action to compensate for the drop in production.

Production is eventually expected to stabilise at 1250 b/d. Crude oil produced at Hazira is light at 40 degrees API but has a high pour point of 29 degrees.

Oil from the present producing Hazira wells is not expected to last long as recoverable reserves are now estimated at just 2m barrels. All the same it is quite a nice additional source of revenue, we are told.

Until now gas has been the main revenue earner from the Hazira field. Indian Oil is the governments nominee for Hazira crude but the price has yet to be decided.

Preliminary talks are going on, we hear. GSPC and Niko have a crude oil sales agreement with Indian Oil but the price will be revised and fixed once mutual sampling of oil is done.

Expect this to happen over the next two or three months. In March, operator Niko expected to strike oil in the fourth offshore well at Hazira and later drill a fifth well.

But production tests from the fourth well showed it could produce only small amounts of oil. It wasnt commercially viable, we hear.

Luckily, the well proved a good gas producer with potential production of 400,000 cm/d. Some pressure surveys will be done in the next three to six months to estimate the extent of the reserves in this well.

Plans to drill a fifth offshore well to look for oil have been abandoned.