Geopetrol contests exclusion of AA-ONN-2003/2

Vol 9, PW 8 (28 Jul 05) People & Policy

Another block excluded from the award announcement was AA-ONN-2003/2 in Arunachal Pradesh.

Here, a consortium of Geopetrol of France with 30%, Canoro Resources of Canada with 30% and NTPC with 40% emerged winner with an aggressive work programme. But the consortiums assumption that the block lies in a Frontier Area has created problems.

Operator Geopetrol has offered to carry out the Phase-I work programme in four years instead of three years as offered by other bidders. Sadly, the ministry has never marked out this block as a Frontier Area block.

Second ranked bidder Jubilant Enpro with partners GAIL and GSPC argue that Geopetrols bid is a conditional one and should be rejected. Geopetrol and Canoro soon got news of this and on 17th June protested with letters to oil minister Mani Shankar Aiyar.

Although our work program commitment and investment multiple seems to have been the best offered amongst the 6 bids submitted for this block, writes Canoro. We are disturbed by rumours that the DGH might disqualify our bid because of our interpretation that the block is in a Frontier Area (which allows for the first phase of the Exploration Period to be a maximum of 4 years rather than the more normal 3 years).

Canoro said the block meets all the basic requirements of the definition given in the model PSC (of a Frontier Area) such as: lack of infrastructure, lack of marketing facilities, logistically difficult and geologically complex. Canoro lists other issues that make investing in this area difficult.

It is a disturbed area; it is a disputed area; has the lowest population per sq km in India and has a less qualified workforce; is almost on the boundary with Myanmar and has security problems. Canoro said the consortium had accumulated supportive documentation to support its position.