Tullow Oil anger at delay in PSC for Assam concession

Vol 3, PW 24 (22 Dec 99) Exploration & Production

Tullow Oil is stepping up efforts to persuade ONGC to begin PSC negotiations for its AA-ONJ/2 concession in Assam.

Indias Cabinet Committee on Economic Affairs awarded AA-ONJ/2 Tullow on 23rd November 1996. Subsequent efforts to sign a PSC have been blocked by ONGC, which wants to retain the producing Banaskandi gasfield that falls in the permit area.

Banaskandi produces an average 100,000 cubic metres a day (cm/d) for the nearby Assam Gas Company. An internal (undated) ONGC document (seen by Petrowatch) confirms that ONGC has requested the Indian government, to release the block to ONGC.

In other words, to revoke the award to Tullow. In the meantime, ONGC is negotiating with Tullow for compensation of past development costs incurred at Banaskandi, should the government refuse its request and stand by the award.

According to Tullow, ONGCs demand for compensation is much too high. In November, the Eire-based company sent a counter proposal to ONGCs Exploration & Contracts Monitoring (EXCOM) division with a reduced offer.

A response from EXCOM is awaited. Tullow is angry at the suggestion that AA-ONJ/2 or Banaskandi might be returned to ONGC.

This is not how you treat the largest foreign acreage holder in India, a source tells this report, We would be pretty annoyed if the field was returned to ONGC. The block, including Banaskandi, was awarded to us and it is costing us money just to keep it on our books.

Interestingly, Tullow recognises that the inclusion of Banaskandi in the original tender was probably a mistake that ONGC is now regretting. The concession, located in a strip of Indian territory between Myanmar and Bangladesh, is the only one among 7 held by Tullow in India where no PSC has been signed.

In mid-October this year, Tullow opened an office in the Vasant Vihar district of Delhi.

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