Oil India to buy 20% of CR-ON-90/1 from Premier

Vol 9, PW 9 (11 Aug 05) Exploration & Production
     

Oil India is set to acquire 20% of exploration block CR-ON-90/1 in northeast India from operator Premier Oil.

Discussions between Oil India and Premier have concluded and an application was made on 29th July to the oil ministry to approve the deal. Presently, the equity structure on the block is Premier with 49%, Indian Oil with 35% and Essar Oil with 16%.

Information with this report indicates that Premiers partners on the block and licensee ONGC have separately indicated their No Objection to the deal with Oil India. Once Oil India comes in, Premiers stake will reduce to 29%.

As licensee ONGC has an option to assume control of 30% in any commercial discovery. When that happens the participating interest of each of the consortium members will reduce proportionately.

Under the PSC, ONGC will not pay past exploration costs if it exercises its 30% option. But they will pay the entire cess and royalty.

Premier is in the one-year extension to Phase-II of the exploration period. This extension expires on 12th July 2006.

During Phase-II Premier is committed to drill one exploration well tentatively scheduled for the middle of next year. CR-ON-90/1 is a geologically challenging block but Oil India is attracted by the clear indications of hydrocarbons from earlier drilling.

As former operator, ONGC had drilled two exploration wells with a Target Depth of 3500 metres each. But they could not reach TD because of a blow-out.

Burmah Oil Company had a similar experience. They drilled one well but even that had to be suspended because of a blow-out.

Oil India feels that these blowouts as well as florescence clearly show the block is prospective. Block CR-ON-90/1 originally measured 2534-sq km and the PSC was signed in June 1998.