Posts Tagged ‘ E&P ’

Contracts like Reliance’s KG-D6 are designed to benefit private players:

After the CAG, the high-level Ashok Chawla Committee has criticised the system of Production Sharing Contracts like the one Reliance Industries signed for the gas-rich KG-D6 block, saying these contracts are designed to benefit private players at the government’s expense.

Reliance bagged the KG-DWN-98/3 block in the first round of NELP, which was pioneered by the NDA government, and signed the PSC for the block in 2000.

The PSCs provides for the operator to recover all capital and operating expenditure become the government’s share of profit from a field rises to as high as 85 per cent. This system gives “incentive to (an operator to) increase his investment, or front-end his work plan” in order to see that the threshold where government’s profit take rises rapidly is not reached, the Chawla panel said in its report.

At the heart of the PSC lies the ‘investment multiple’, the ratio of net cash income to exploration and development costs. The investment multiple defines the share of profits that go to the government. The higher the expenditure, the lower the IM and hence, the government’s share of profit. Citing the example of KG-D6, the Chawla panel said, “The relationship between the pre-tax investment multiple (PTIM) and the share of contractor profit petroleum changes dramatically once the PTIM crosses 2.5, with the government’s share increasing from 28 per cent to 85 per cent.” “It is useful to remember that this schedule is bid by the operator and not determined by the government,” it said. “A high share of some PTIM will help to win the bid, depending on the financial model of evaluation used, but it does raise concerns that such a radical change would provide very strong incentives for any operator to adopt all investment and strategies possible to ensure that the PTIM stays within the 2.5 limit,” the panel report said. The CAG, in a draft report on its audit of the KG-D6 accounts, had also criticised the current PSC structure saying it was “unsuitable for protecting the government of India’s financial interests.

CAG saleuthes after prolonged examination could not find anything to substantiate their claim of Gold Plating of cost by Reliance Industries in the flag ship project of the Company.

2012
05/20
CATEGORY
Exploration
Oil & Gas
Reliance
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Stock Idea : Aban Offshore

Aban Offshore Ltd., formerly Aban Loyd Chiles Offshore Limited, is an off-shore oil and gas drilling company. The Company has two business segments: Offshore Oil Drilling and Production services, and Wind Power generation. The Company together with its sub-sidiaries, provides oil field services for offshore exploration and pro-duction of hydrocarbons in India and internationally.

ASSETS

It owns and oper-ates offshore drilling rigs, as well as provides drilling services to vari-ous oil and gas operators. The Company pos-sesses twenty offshore assets including fifteen jack-up offshore drilling rigs, two drill ships, one floating production platform and a jack-up rig and drill ship each on bareboat charter. It enjoys the privilege of part-nering with several global players in the oil and natural gas industry by offering them reliable, state-of-the-art drilling services. Its notable cus-tomers include ONGC, Hardy Exploration & Production (India) Inc., Oriental Oil Co. (Dubai), Shell Burnei, Shell Malaysia, Hind Oil Explo-ration Co. Ltd, Cairn Energy, Petronas Carigali etc. It is India`s largest offshore drilling entity in the private sector. Its innovative and cost ef-fective solutions make the company one of the most efficient interna-tional drilling contractors. Aban Singapore Pte. Ltd. (ASPL) was formed as a wholly owned subsidiary of Aban Offshore Ltd. to offer drilling services to large global oil and gas operators.

INVESTMENT RATIONALE:

Aban Offshore has received a contract to drill two wells and for two optional well programmes. The firm period of the contract, ex-pected to commence following the delivery of the rig from the yard in the first quarter of 2009, is likely to last for 150 days with an es-timated revenue of USD 30 million during the firm period.

Venture Drilling AS, in which the Aban Singapore (ASPL), sub-sidiary of Aban Offshore, has a 50% indirect shareholding, has agreed with ExxonMobil for a six month extension of the present drilling contract, in direct continuation and on same terms (at an operating day rate of USD 425,000 after withholding tax). The ex-tended period is likely to last till July 2009.

The company has received a contract to drill 3 wells in Malaysia. The estimated revenue from the contract is USD 17 million for 90 revenue days.

It has won another contract worth USD 38 million to drill 6 wells and one optional well program in Malaysia. Aban Offshore signed an agreement with Exxon Neftegas for the deployment of the jack-up rig Murmanskaya Offshore Russia for a 2 well programme. The project is expected to generate USD 34 mil-lion worth revenues, which has an estimated duration of 160 days and will commence in direct continuation of its present contract that is expected in June 2008.  It will strengthen the top & bottam line of the company.

The company received letter of intent for the deployment of the newly built jack-up rig Aban VIII in the Middle East for 18 wells plus 4 optional wells programme. The company expects USD 300 million in revenues over 4 years. The deployment is to commence following delivery of the rig, which is expected in the second quar-ter of 2008.

2008
09/13
CATEGORY
Aban Offshore
GSPC
ONGC
Stock Idea
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Reliance, divesting KG D6 Assets ?

Reliance Industries (RIL) has scrapped its plan to transfer 80% of its participatory interest in the famous D-6 block of the Krishna Godavari basin gas field, perhaps the company’s most valued asset, to four of its subsidiaries. The company had sent a letter to the petroleum ministry on Thursday (August 28) withdrawing its earlier application which sought permission to transfer the stake to the subsidiaries. Under the production sharing contract, any contractor (here RIL) is supposed to get the government’s nod for transferring stake in any asset.

In the letter, RIL says that it has organised funds required for the exploration and production of the block, officially known as KG-DWN-98/3, and therefore wants to abandon its plan to transfer its participatory interest to the subsidiaries.

In its application to the ministry for the proposed transfer three months ago, it had said the move was aimed at increasing flexibility in organising finances for the development of the project. RIL’s investment in the KG basin blocks is expected to be around $8 billion. Interestingly, RIL, had got the go-ahead from the Directorate General of Hydrocarbon on this on August 21. The proposal had then been forwarded to the petroleum ministry.

When contacted, a RIL spokesperson confirmed the development. “RIL has raised the requisite financial resources and is no longer pursuing the application for assignment of participating Interest (PI) to the subsidiaries. Implementation of the project has not been hindered,” the spokesperson said.

“However, in view of non-receipt of such approval/confirmation, we have successfully firmed up alternate means of financing and have met the cash requirements of the project…. We are entitled to assign the PI as envisaged in the…PSC but having raised the requisite finance as aforesaid, there is no need at this time for us to pursue the means of financing that would envisage assignment of PI and for the record hereby formally withdraw the..application and request that no further action need be taken thereon,” RIL said in its letter addressed to the joint secretary (exploration) in the ministry of petroleum. ET has a copy of the latter.

Industry experts said RIL’s move could have been partly driven by the criticism of its big shareholders. A few major shareholders, especially the foreign institutional shareholders, had questioned the logic of the proposed move in the past few days after the development came to the fore on Tuesday.

RIL clarified the next day that these four companies, Reliance KG Exploration and development, Reliance KG D6 E&P, Reliance KG Basin and Reliance E&P KG, are wholly-owned arms. But there were reports saying at least one of these companies could be part-owned by two top-level RIL executives.

The timing of RIL’s withdrawal from the proposed move assumes significance. RIL has withdrawn the transfer of the participatory interest on Thursday (August 28), four days before the hearing of the legal case between the company and Anil Ambani’s Reliance Natural Resources (RNRL) in the Bombay High Court.

Source : ET, INfraline

2008
09/01
CATEGORY
Exploration
KG Basin
Oil & Gas
Reliance
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Reliance Strikes Eighth Gas Discovery

Reliance announced Eighth gas discovery in NEC-OSN 97/2 (NEC-25) block located in the NEC-Mahanadi offshore basin, off the Orissa coast in Bay of Bengal. This shallow water block covering an area of 10,755 sq km in water depths ranging between 20-600 m was awarded under the bidding round of NELP I. RIL holds 90% participating interest (PI) and NIKO (NELPIO) Ltd. holds 10% of PI in the block.RIL had earlier struck six consecutive commercial discoveries in this block, for which the development plan has been submitted to the Directorate General of Hydrocarbons (DGH) for approval.The well NEC 25-J1 was drilled with the objective of exploring upper Miocene slope sands in the deeper part of the block. This well was drilled at a water depth of 478 m to the target depth of 2926 m. For the first time in this basin, the well encountered high quality multi-darcy gas bearing reservoir sands in the interval 2484 – 2495.5 m based on the interpretation of the wire-line logs. Subsequently, the presence of gas in the above interval was confirmed by carrying out Modular Dynamic Testing (MDT).

This discovery establishes the hydrocarbon potential towards the deeper part of NEC-Mahanadi Basin and opens up more acreage for further hydrocarbon exploration efforts.

2008
02/28
CATEGORY
Oil & Gas
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First Discovery in Krishna Basin

Mumbai, February 13, 2008: Reliance Industries Limited (RIL) is pleased to announce the first gas discovery in exploratory block KG-DWN-2003/1 (KG-V-D3) of NELP-V. The block KG-DWN-2003/1 is located about 50 kilometers from Machalipatnam, in Andhra Pradesh in the deep waters of the Krishna Basin in the Bay of Bengal. It covers an area of 3288 Sq. Km. The gas discovery has been struck in the very first exploratory well in this block. RIL holds 90% participating interest (PI) and Hardy Exploration and Production India Inc holds balance 10% in the block.

The well KG-V-D3-A1 was drilled at a water depth of 716 m, to a total depth of 1937 m, with the objective of exploring Pliestocene deep water fan complex play fairway. A thick reservoir was encountered with gross hydrocarbon column of around 84 meters in Pliestocene the potential of which was evaluated through wire-line based technology called Modular Dynamic Testing (MDT). Subsequently the well flowed at a rate of 38.1 MMscfd on conventional testing.

This play fairway is expected to cover a large area of the block. This discovery, named ‘Dhirubhai – 39’ has been notified to Government of India and Directorate General of Hydrocarbons. The potential commercial interest of the discovery is being ascertained through more data gathering and analysis.

This discovery validates RIL’s understanding of the petroleum system in this block. Based on interpretation of the first phase seismic campaigns covering about 65 per cent of the block area, several more prospects with potential upside have been identified along the same play fairway as well as other play fairways at different stratigraphic levels.

2008
02/23
CATEGORY
Oil & Gas
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