Oil Ministry moves Cabinet for drilling holiday

Oil Ministry moves Cabinet for drilling holiday
PTI
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First Published: Mon, Aug 11 2008. 03 10 PM IST
Updated: Mon, Aug 11 2008. 03 10 PM IST
New Delhi: Faced with a global shortage of offshore drilling rigs, the Petroleum Ministry has asked the Cabinet for a three-year drilling holiday or moratorium for firms like Oil and Natural Gas Corp (ONGC) and Reliance Industries.
Companies like ONGC and Reliance have not been able to meet their work commitments for the blocks they had won under the New Exploration Licensing Policy (NELP) rounds due to a crunch in availability of deep-sea drilling rigs.
Official sources said the Ministry has moved a note for the consideration of Cabinet Committee on Economic Affairs for giving a drilling holiday from 1 January, 2008, to 31 December, 2010, for 33 blocks awarded under the fifth round of NELP.
Of the blocks, where the drilling moratorium would apply, 15 are with ONGC, 17 with Reliance and one with ENI of Italy.
Globally, oil and gas explorers are faced with huge shortage of drilling rigs as countries stepped up E&P activity in wake of the surge in crude oil prices. Day-hire charges for a deep-sea drill rig have shot up 250% during the past two years.
But for the drilling holiday, the companies faced huge penalties for not fulfilling their work commitments that included drilling of a certain number of wells.
Sources said, though a drilling holiday was earlier being considered even for NELP-VI, the same has not been included in the Cabinet note as the first phase of exploration for these areas is up to 2010.
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First Published: Mon, Aug 11 2008. 03 10 PM IST
More Topics: Oil | petroleum ministry | ONGC | reliance | NELP |