GSPC likely to delay 2nd November KG block deadline

Vol 10, PW 13 (19 Oct 06) People & Policy

Chevron, ENI, British Gas and BP can breathe easy.

PETROWATCH learns Gujarat State Petroleum will most likely push back its 2nd November deadline for binding financial bids for a stake in KG discovery block KG-OSN-2001/3. BP and Chevron, it seems, have asked GSPC to postpone the deadline until results from well KG#15 are firmed up.

Some in GSPC support the move, confident that good results from KG#15 will secure a better price. From present data, Gujarat authorities feel GSPC could get a minimum $1bn for a 10% stake.

Another option considered by GSPC is to keep the 2nd November deadline and open only the technical component, leaving the financial bids unopened until the KG#15 results come in. If the test results are below expectations, then the financial bids can be opened, reveals a source.

But if results exceed expectations then fresh financial bids can be called for. Any decision on the way forward is expected before 26th October when chief minister Narendra Modi flies off on a weeks visit to China and Singapore.

GSPCs original plan was to finish drilling KG#15 to TD of 5600 metres by 30th September, carry out testing over October and give test results to bidders in time for the 2nd November deadline. But drilling is taking longer than expected, as Saipem Perro Negro 3 jack-up encounters sands beyond 5600 metres.

By (Tuesday) 18th October, the Perro Negro 3 drill bit had reached 5730 metres in GSPCs search for the elusive anomaly that it believes will be in a 60-metre range. Drilling is constrained by the inability of Perro Negro 3 to drill beyond 6000 metres depth.

GSPC is already quite close to this limit but has yet to reach the basement. Perro Negro 3 is drilling through sands at a rate of 5 metres per hour and GSPC wants to terminate drilling at 5800 metres over the next few days.

It then wants to begin logging before casing the well ahead of testing.