Cairn in Ravva budget battle with suspicious DGH

Vol 5, PW 6 (09 May 01) Exploration & Production

Even a company as well versed with Indian conditions as Cairn Energy suffers the occasional bout of obstructionism from officialdom.

Cairn is having problems getting final Management Committee approval for the second phase of its Ravva drilling programme. Anyone familiar with joint venture MC meetings won't be surprised to hear that the nit-picking is coming from ONGC and the DGH.

Apparently they reckon operator Cairn is exaggerating costs and have begun to question particular expenses. Cairn rejects the accusation, and argues that its 'Direct Operating Cost' of $0.80c per barrel of crude is among the lowest in the world.

"It's futile to pick and choose and say 'I'll accept payment for this nut and bolt but I won't accept payment for that nut and bolt'," reveals a source. "But that's exactly what they are doing." Add to this a continued refusal by Compagnie Generale de Geophysique to hand over 3D seismic until it gets paid by ONGC and you've got a series of problems this joint venture could clearly do without.

Until Cairn gets approval for the budget, its drilling programme at Ravva is going nowhere. Plans are afoot this month to embark on a six-well programme of two workovers, two new wells and two satellite gas wells.

For this Cairn signed a six-month lease on May 6th for the 250-ft mat slot Aban II rig at a cost of $31,000 a day.

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