Cairn Energy's brief encounter with the Indian navy

Vol 4, PW 3 (15 Mar 00) Exploration & Production

Cairn Energy denies responsibility for the loss of two days production at its Ravva oilfield offshore Andhra Pradesh in the Krishna Godavari basin.

Instead the company is pointing a finger at the "usual inability to decide" of Indian officialdom on an urgent request for the extension of licences for two of its tugboats. In late November last year, the Indian navy intercepted the tugs near Ravva and discovered that their licence to operate had expired.

"The navy came down hard and refused to allow operations to continue until the licence was renewed," a source tells Petrowatch. As a result, production at Ravva was temporarily shut down, causing the loss of 112,000 barrels of production.

According to Cairn, it was forced to close production because of delay in granting an extension by the office of the Director General of Shipping, attached to the Ministry of Surface Transport, and NOT through negligence. Whoever is to blame, the Indian oil ministry is taking the matter seriously.

On hearing of the incident, oil ministry officials sent a strongly worded letter to the Directorate General of Hydrocarbons (DGH) demanding an explanation. Angry, the DGH turned on Cairn Energy.

At issue is who will pay for the two days loss of production Cairn is confident it can recover the loss from future production at Ravva, which produces 50-55,000 b/d. On 10th March, the 'Management Committee' overseeing Ravva, which includes representatives from the DGH and Cairn, met to finalise "outstanding issues" relating to the annual financial audit of the field.

This has to be submitted by a deadline of 31st March. Cairn has NO plans to increase production to 80-100,000 b/d.