DGH allows PGS to sell offshore Andaman Islands 2D

Vol 13, PW 6 (27 Aug 09) Exploration & Production

Norwegian seismic service provider Petroleum Geo Services (PGS) has resolved a dispute with the DGH, enabling it to sell speculative 2D data acquired last year in deep waters off the Andaman Islands.

This means bidders in NELP-VIII need not bid blindly for 18 blocks on offer near the Andaman Islands. It also ends an unpleasant relationship between the DGH and PGS that persisted for a full year, with the oil ministry called in to keep the peace.

This is good news for PGS, which was hit hard by an August 10 letter from the DGH that terminated a profit-sharing agreement between the two, signed in December 2007. PGS was upset over the DGH decision to not offer seismic data for 12 of the 18 Andaman Islands blocks even though the 2D covered six of the 12 blocks.

PGS complained to the oil ministry, which in-turn asked the DGH on August 6 to see how the problem could be resolved within a week. But four days later the DGH unilaterally terminated the December 2007 agreement with effect from August 15 and directed PGS to hand over all its raw data by August 21.

PETROWATCH understands matters were resolved amicably thanks to a series of meetings between the DGH and PGS, following the August 10 termination letter. Finally, on August 18, the DGH informed PGS that it could sell “processed dataâ€‌ but not “rawâ€‌ data and that PGS should “re-processâ€‌ its data first, as the DGH was unhappy with earlier processing results.

But there’s a catch: if the DGH is still unhappy with what PGS delivers, it reserves the right to approach a third party to get the reprocessing done and adjust the cost against revenue that PGS generates by selling the final data packages – a small price to pay, as PGS could have lost a lot more if the DGH had not relented.

LNG Summit