Texaco Pulls Out Due To Delay

The unusual delay in the announcement of bidding rounds for coal bed methane (CBM) by the government has claimed its first victim. The US multinational Texaco has decided not to participate in the bidding rounds because of the delay.

Texaco, which is a leader in CBM extraction technology and has some commercial CBM producing fields in the USA, has informed the government on its decision. Some other oil majors are also having second thoughts on participating in bidding rounds for CBM in the country.

Industry sources said the authorities take unusually long to decide, firstly on announcing the bidding rounds, and then on negotiating contracts before awarding them.

 

Recently, the government announced a decision to start negotiations for production sharing contracts for 18 oil and gas exploration blocks. Some of these blocks had been awarded almost four years ago but work on the site could not be started in the absence of the production sharing contract.

The high-powered Sundararajan Committee on Hydrocarbon Perspective:2010 had also pointed out in its report that "a long time is taken for taking a decision on the award of production sharing contracts. The time taken for making a decision on the bids ranges from two to three years. This can be the single biggest disincentive for an international investor. China takes 90 days and some other countries even less".

The report says there are delays in post contract clearances that have be obtained by the contractor.

"The contractor is required to obtain several clearances/no-objection certificates from the Central and state governments. These clearances can take up to several months."