North Tapti development hostage to Ambe DGH drama

Vol 13, PW 2 (02 Jul 09) Exploration & Production

Anyone waiting for news on ONGC’s tender to develop the North Tapti gasfield will need patience until the oil ministry decides how to respond to the DGH’s demand for punitive action against operator Cairn India’s lethargy in developing the nearby Ambe field.

ONGC and Cairn both agree it makes perfect sense to develop the two simultaneously, more so since North Tapti sits near the CB-OS/2 block, which includes not only Ambe, but also the producing Lakshmi and Gauri fields. But Cairn’s delay in submitting a development plan for Ambe provoked the DGH to threaten confiscation of the field and later - when it was pointed out confiscation was too extreme - to impose a â€کliquidated damages’ penalty.

Cairn and ONGC oppose this and want the oil ministry to force the DGH to withdraw its demand, saying â€کliquidated damages’ are levied only on exploration acreage, not on a discovered field. An oil ministry source confirms ONGC and Cairn have formally complained about the â€کliquidated damages’ penalty and want it cancelled, but adds no decision has been made either way.

Cairn held an inconclusive meeting to discuss Ambe field development with partners Tata Petrodyne and ONGC, which also holds 45% in CB-OS/2, on June 18. “Joint development of North Tapti with Ambe can happen only if the ministry cancels the â€کliquidated damages’,â€‌ says a source.

Until then, 15 companies who bought bid documents in response to a February tender from ONGC to develop North Tapti will have to kill time. Twelve of them attended an ONGC pre-bid meeting on March 30 to answer queries, among them Larsen & Toubro, National Petroleum Construction Corporation, Punj Lloyd, Swiber, Essar, Leighton and AFCONS.

On May 22, ONGC despatched answers to the queries and received bids soon after. But since then nothing has moved and the date for opening technical bids has been pushed back again – this time to August 4.