RIL threatens to pull out of exploration

Reliance Industries (RIL) has threatened to stop oil and gas exploration if it is not granted the promised drilling moratorium to cover for the acute shortage of rigs.

"The company today made a presentation to the ministry seeking relief for not being able to meet its commitment for drilling wells on 14 blocks during 2006 and mid-2009 when there was an acute shortage of drilling rigs," a Petroleum Ministry official said.

Firms like Oil and Natural Gas Corp (ONGC) and RIL have not been able to meet their work commitments for the blocks or areas they had won under the New Exploration Licensing Policy (NELP) rounds and an Empowered Committee of Secretaries has twice - the last being in January this year - cleared grant of a three-year drilling holiday or moratorium.

Despite being cleared by the ECS, the Petroleum Ministry has failed to move the Cabinet on the issue.

"They told us that they diverted their rigs on government's request for expediting production of natural gas from Krishna Godavari basin D6 fields in national interest and so were unable to meet their entire drilling commitment on other blocks," he said.

RIL stated that if the promised drilling holiday till December 2010 was not given it would pull out of the blocks, he said.

A company spokesperson declined to comment.

RIL in the presentation said that despite spending $2 billion on drilling compared to its commitment of $0.8 billion, 14 deepwater blocks suffered a major setback due to unavailability of rigs during 2006 and 2009.

Against the committed spending $91 million on exploration in the 14 blocks, the company spent about $500 million. During the period RIL drilled 13 wells in spite of prioritising gas development and needs 40-45 rig months to achieve the committed 25 more wells.

"If not for delays in mobilisatin of contracted deep water rigs and prioritisation of mobilised rigs for development drilling of KG-D6 which is a national priority, RIL would have completed the committed wells ahead of time," the presentation said.

RIL wanted the moratorium to be extended to all deepwater operators on a level playing field.

The ECS had in January approved a drilling holiday for 33 blocks awarded in the fifth round of NELP. Of the blocks, where the drilling moratorium would apply, 15 are with ONGC, 17 with RIL and one with ENI of Italy. RIL is now seeking drilling moratorium for just 14 blocks.

Globally, oil and gas explorers are faced with huge shortage of drilling rigs as countries stepped up oil and gas hunt in the wake of the surge in crude oil prices. Day-hire charges for a deep-sea drill rig have shot up 250 per cent during the past two years.