Deora presses ahead with drilling holiday

Vol 14, PW 1 (01 Jul 10) People & Policy

Murli Deora has finally found the courage to press ahead with a much-delayed deepwater drilling holiday, first proposed by ONGC and Reliance more than two years ago.

PETROWATCH learns the drilling holiday proposal has been approved by oil minister Deora as a direct result of the truce between Ambani brothers Mukesh and Anil and has now reached the desk of oil secretary S. Sundareshan.

We hear the proposal was finalised around June 10 after the oil ministry exploration division and other offices gave their inputs. “Deora should sign the file soon,” confirms an industry source.

After Deora signs off, the file will move to the union cabinet for final approval. “There should be no further hurdles,” we are told.

“Cabinet approval is a formality.” Once cabinet ministers give their seal of approval, upstream companies will get a three-year drilling holiday across 30 deepwater blocks backdated from January 1, 2008 to December 31, 2010.

No penalties will be demanded from operators who failed to drill wells committed during this period. But it’s unclear if the incomplete work programme will be carried forward into the subsequent three years, or allowed to lapse.

Between them, ONGC, Reliance and Italian major Eni committed to drill 43 deepwater wells at these blocks but demanded a drilling holiday because of a global rig shortage two years ago when oil prices were high. Oil ministry bureaucrats sympathised with the drilling holiday demand, but Deora sat on the file.

“Deora was scared to sign off because he might have been accused (by Anil Ambani) of favouring (Mukesh-owned) Reliance,” we hear. “Deora was already publicly labelled a Mukesh stooge and didn’t want to be caught in the crossfire.

But now the brothers have made up, he is no longer worried.” Other pending proposals will also now be approved by Deora, following the truce.

LNG Summit