Cairn to lose Ambe unless it submits development plan

Vol 12, PW 14 (27 Nov 08) Exploration & Production

Cairn India risks being stripped of the Ambe gasfield within the CB-OS/2 permit in Gujarat - home to the Gauri and Lakshmi gasfields - because it can’t get its act together to submit a Field Development Plan (FDP) to the DGH.

PETROWATCH hears the DGH first asked consortium partners Cairn (40%), Tata Petrodyne (15%) and ONGC (45%) to relinquish the discovered but non-producing Ambe gasfield in July this year following Cairn’s rushed submission of the FDP without Operating Committee approval. In its latest response to the DGH on October 17, Cairn promises to submit the FDP by the end of this month (November).

Explaining its lethargy, Cairn stresses that Ambe is a marginal field and that submission of the development plan has been delayed because the consortium is trying to find “optimal and economical ways of developing the discovery in these times of escalating offshore development costs.â€‌ Can operator Cairn meet its new end-November deadline “It looks unlikely,â€‌ reveals a consortium source.

“Submission of the plan was delayed because of modifications.â€‌ Another problem for Cairn is reluctance by ONGC to endorse the FDP.

“DGH is writing letters to the consortium asking it to relinquish the area,â€‌ reports a source. “How can you take an investment proposal to ONGC directors if the area will be relinquishedâ€‌ More, no ONGC board meeting is scheduled for this month; making it even less likely that Cairn can submit the FDP as promised.

In letters to Cairn over Ambe the DGH is also claiming â€کLiquidated Damages’ as punishment for the repeated delay in submission, prompting confusion among consortium sources. “Where is the question of â€کLiquidated Damages’â€‌ asks a source.

“The FDP has not been approved by the Management Committee of the block. â€کLiquidated Damages’ are only applicable in NELP contracts and this is a pre-NELP contract.