Reliance wants drilling holiday over 14 blocks

Vol 13, PW 10 (22 Oct 09) People & Policy

Reliance is once again demanding a drilling holiday from its Minimum Work Programme (MWP) at 14 deepwater blocks offshore India.

PETROWATCH learns Reliance is worried it might not be able to drill 10 committed wells across these 14 blocks before their exploration phases end because of a worldwide shortage of suitable deepwater drilling rigs. One thing Reliance doesn’t want to do is be stripped of these 14 blocks because it has already sunk between $1bn and $1.3bn on exploration and drilling.

Instead it wants the oil ministry to grant it a â€کholiday’ from its MWP between January 1, 2008 and December 31, 2010. On October 6, a Reliance team led by PMS Prasad, director on the company’s board and chief of its oil business, presented its case for the fourth time to an oil ministry panel of additional secretary S.

Sundareshan, joint secretary exploration DN Narasimha Raju and others. Reliance had made similar presentations in the past to ministry officials in January 2007, April 2008, and June 2008.

But for some reason, says a source close to developments, the ministry keeps asking it to justify its demand. “When Reliance first made its case 22 wells needed to be drilled,â€‌ says a source.

“But 12 have been drilled since then.â€‌ In addition to the ten wells pending Reliance also has 46 potential locations at these blocks where it wants to drill but can’t because of the rig shortage.

After the Reliance presentation, ministry officials wanted to know why Reliance sub-let Transocean rig Dhirubhai Deepwater KG-1 to ONGC in May if it claims to face a shortage of deepwater rigs. Reliance replied that DD-KG-1 can only drill in ultra-deepwater locations, of the kind it does not have right now but which will come up within the next three years.

Reliance’s pending locations are in water depths of 1200 to 2000 metres, but DDKG1 is suited to drill in 3000 metres water depths. “Using this rig to drill in shallower water would push up the cost of drilling and be inefficient,â€‌ says a source.

“So we sublet DD-KG-1 to ONGC.â€‌