Reliance gets 12-month extension at KG-ON-1

Vol 6, PW 16 (09 Oct 02) Exploration & Production

BY CONTRAST RELIANCE has had no difficulty getting a 12-month extension to August 2003 at its exploration block KG-ON-1 in the Krishna Godavari basin.

Reliance needs the extra time to complete the minimum work programme in 'Phase-I' and to decide whether to opt for 'Phase-II'. KG-ON-1 was originally awarded to Tullow Oil in 1998.

When Tullow was planning a tender for 500-km 2D for its two-year 'Phase-I' work programme it hit a roadblock at the environment ministry over the presence of a wildlife sanctuary in one of the most prospective areas of the block. Eventually the environment ministry agreed to narrow down the sanctuary area to 200-sq km of the 4,810-sq km block.

During this exercise, valuable time was lostand only 415-km old 2D could be reprocessed. 'Phase-I' ran out last September.

Sympathetic to Tullow, the ministry approved a year's extension, but offset the extra time against 'Phase-II'. In February last year, Reliance farmed in as operator with 40% and proposed reprocessing 1,200-km old 2D and the 500-km fresh 2D planned by Tullow, but said it needed more time.

The oil ministry agreed that fresh 2D could only be shot in December after monsoons followed by nine months for reprocessing, interpreting and integration into a geological model. It agreed the extension but will offset the extra time from the three-year 'Phase-III' period, which includes one well.

Block KG-ON-1 sits next to a spate of hydrocarbon discoveries by Cairn Energy and Reliance and is considered highly prospective.