Vol 3, PW 7 (28 Apr 99) Exploration & Production

Tata Petrodyne is one of two private sector oil companies in India devoted exclusively to exploration and production.

The other is Hindustan Oil Exploration Company (HOEC), partly owned by Unocal and British Borneo. In addition to PY-3, Tata also has two exploration concessions in the Cambay basin: CB-OS/1 and CB-OS/2 in an alliance with British Borneo (inherited from its takeover of Hardy Oil & Gas) and Cairn Energy respectively.

It is also part of the consortium for the CY-OS/2 concession in the Cauvery Basin. CB-OS/1:-Results here have been disappointing.

The consortium has so far spent $43m on three dry wells, and a fourth well which made a hydrocarbon show but was not tested due to time constraints on the drilling rig and weather considerations. A second drilling programme with a three-well offshore commitment is expected to begin at the onset of the next "weather window" in November 99 to June 2000.

One report indicates the Tatas are trying (and will succeed) to convert these offshore commitments to onshore. Industry analysts, however, do not expect the result to be any better than before.

The Tata commitment here is $3.3m. CB-OS/2:-This concession lies adjacent to the one above.

A PSC was signed on 30 June 98 in which Tata Petrodyne has a 45% interest; Cairn Energy 45%; and ONGC 10%. Two months ago the consortium issued tender notices for a 2D seismic survey of the concession.

Four companies have bought papers. CY-OS/2:- This is a 5,000 sq km concession for which a PSC was signed on 19 November 1996.

Tata, Mossbacher, British Borneo and HOEC each hold 25%. An imminent seismic survey is expected to cost the Tatas at least $1m.

Industry sources tell Petrowatch that exploration drilling in this concession is uneconomical at current global oil prices. An executive with one company approached by Tata tells this report: "I'd like to buy it at a dollar", adding that Tata Petrodyne has made "negligible returns on huge investments", through a mixture of, "bad geological models, uncontrolled costs and bad management".

He said: "The company has nothing going for it, except a bit of production in PY3, but this is declining or coming to an end anyway". For others the advantage of Tata Petrodyne lies less in its assets than in its existing infrastructure in India: useful for a newcomer wishing to get a toe-hold in the upstream sector.

Tata Petrodyne employs approximately 15 non-operational staff at its office in Delhi.