ONGC blocks Ratna PSC signing with new demands

Vol 9, PW 21 (09 Feb 06) People & Policy

ONGC has raised a number of obstacles in the way of a PSC for the Ratna and R Series of fields offshore Mumbai.

In early January, ONGC failed to turn up to initial final changes to the draft contract. We hear the ministry had summoned Essar Oil (50%), ONGC (40%) and operator Premier Oil (10%) to initial final changes before the PSC could be signed.

ONGCs absence was explained days later when director offshore NK Mitra wrote to the oil ministry on 7th January pointing out that, certain grey areas in the PSC need to addressed. On 18th January, the ministry replied to Mitra asking him to discuss these grey areas with Essar and Premier Oil.

We hear discussions are expected this week. Mitra identified five or six issues of which four are considered crucial.

First, ONGC wants to buy all the oil produced from Ratna. Under an earlier arrangement, Bharat Petroleum was the government nominee in the PSC.

ONGC wants BPCL to be denominated and keep all the crude for its Mangalore Refinery, we hear. The second issue relates to gas produced from Ratna, earlier promised to GAIL.

ONGC wants everybody to agree that GAIL will be denominated, we are told. ONGC wants all the gas for itself for direct sales to customers.

It does not have a happy experience dealing with GAIL for gas from the Panna, Mukta and Tapti fields. The third issue concerns the use of the pipeline to transport crude from Ratna to shore.

Currently, an idle pipeline runs from Ratna to ONGCs producing Heera field and on to land. How will the crude from Ratna and Heera be segregated from each other we hear.

At what point will custody transfer take place and how The fourth issue is reimbursement for the expenses ONGC incurred at Ratna setting up structures and maintaining them when it owned the field. Since then much equipment has been stolen or damaged beyond repair.

ONGC also wants money as compensation for the items that are now missing.