Cairn to include DGH in reserves evaluation process

Vol 10, PW 14 (02 Nov 06) People & Policy

Cairn Energy has finally agreed to involve the DGH in the certification of reserves process at its Indian acreage.

This marks a clear victory for DGH boss VK Sibal who is making it clear to all upstream companies that the government takes a stern view of unilateral reserves announcements. All companies have sent in letters agreeing to our position, Sibal tells PETROWATCH.

In July, Niko Resources was among the first to accept the DGH position but Cairn Energy continued to hold out, until now. DGH impatience with overseas operators stems partly from a Niko announcement on 27th June that tripled in-place gas at the D6 discovery - where it is a 10% stakeholder - from 11.9-tcf to 35.4-tcf.

Nikos higher figure came from Gaffney, Cline & Associates, and contrasts sharply with the lower figure compiled for operator Reliance (90%) by DeGolyer & McNaughton in 2005. We told companies that as per the PSC all information from each block must be given to the government of India, adds Sibal.

All oil and gas produced here is the property of the Indian government. We also told them that it is the consortium which is the reality and not the individual companies in it.

Sibal believes that if a particular company within an upstream consortium wants to carry out an independent reserves study then it should take approval from the management committee (in which the DGH represents the government of India). Also, the management committee should be given all information from the study.

Sibal continues to rubbish claims that foreign companies are bound to disclose all information to stock exchanges in their home countries. This is rubbish, he says.

Do they disclose all the unfavourable information also Cairn Energy has drilled so many dry holes in Rajasthan. Have they disclosed this information What about delays in work programmes and submission of development plans Have these been disclosed Not at all!

LNG Summit