Bengal Energy denies CY-OSN-2009/1 farm-out

Vol 13, PW 19 (11 Mar 10) People & Policy

Toronto-listed Bengal Energy is categorically denying rumours it wants to â€کfarm-out’ part of its 100% stake in shallow water offshore Cauvery basin block CY-OSN-2009/1 on India’s east coast.

Bengal Energy was sole bidder for this 1362-sq km NELP-VIII block in the southern Cauvery basin and was declared provisional winner on October 12 last year. But like others from that round, it is still waiting to sign the PSC.

Over the past few weeks rumours have begun circulating that it is looking for a partner. “That’s news to me!â€‌ exclaims Rajesh Sonpal, India country manager for Bengal Energy, when contacted by this report.

“These are baseless rumours. There is no truth in them.

â€‌ But industry sources insist Bengal Energy has approached the market to find a partner for CY-OSN-2009/1. “One of these companies,â€‌ says an industry source, “asked me to get information about Bengal’s committed exploration work programme.

â€‌ Bengal Energy is not looking for a partner because it needs money, we hear, but to reduce its exploration risk. “Bengal has $50m lying in the bank, I heard,â€‌ adds a source.

“Money is not a problem for this company.â€‌ Another source with a company which partners Bengal Energy in its NELP-VII onshore block CY-ONN-2005/1 adds his voice to rumours that it is seeking partners.

“I have also heard that,â€‌ he says. “But they have not offered anything to us.

â€‌ Bengal Energy made its entry into India in December 2008 with a 30% stake at onland NELP-VII Cauvery block CY-ONN-2005/1, operated by GAIL with 40% and GSPC with 30%. “Bengal must be certain about the commercial prospects of its offshore block,â€‌ says a merchant banker.

“I don’t see anything wrong if it wants to â€کfarm-out’.â€‌ But DGH sources think differently.

“A provisional winner cannot sign a â€کfarm-out’ agreement with anyone before signing the PSC,â€‌ says the DGH. “Bengal Energy has deposited Rs15 lakh ($32,600) as a guarantee.

This will be forfeited if it signs an agreement before signing the PSC.â€‌