Delay in Sabarmati and Bhandut approval hurts Oilex

Vol 10, PW 17 (14 Dec 06) Exploration & Production

Small fields they might be, but the oil ministrys inability to formally approve the transfer of a 40% stake in the Sabarmati and Bhandut from Niko Resources of Canada to Oilex of Australia represents a significant lost opportunity, according to the Australian explorer.

Last year on 24th March, ministry bureaucrats formally approved Nikos transfer of 40% in the Cambay field to Oilex but inexplicably left a decision on the smaller Bhandut and Sabarmati fields pending. If the assignment doesnt come soon our work programme wont be relevant anymore, says Oilex.

We are desperate to get seismic and reactivate these fields. Niko is technically still the operator and has already agreed a preliminary work programme but is reluctant to commit money to a field it no longer wants.

Approval is also in hand from joint venture partner GSPC (60%) and crucially, the DGH. Part of the problem is the recent changes in the ministry, adds Oilex.

The new joint secretary has to settle in. This month the oil ministry promoted Anil Jain to replace the newly installed Narasimha Raju as joint secretary exploration.

Located in the prolific Cambay basin in Gujarat, both Sabarmati and Bhandut are tiny producing fields measuring just 6-sq km each with insignificant production of three barrels a day at Bhandut and 25 b/d at Sabarmati. Oilex believes production at Bhandut, some 35-km north west of Surat, could jump to 150 b/d overnight with the simple installation of a Sucker Rod Pump.

We believe another two wells at Bhandut could increase production even more, adds Oilex Before Oilex acquired Bhandut, Niko drilled well B-6 which flowed 1000 b/d over a week before sealing up. Sand control is an issue at Bhandut.

Oilex believes similar potential lies at Sabarmati, some 5-km north of Ahmedabad, which today produces only 25 b/d but could produce more. Oilex needs to carry out seismic and has appointed Torun Geofysika to submit a proposal but until the ministry approves the assignment of interest any work on the two fields is pointless.