ONGC, GAIL May Have to Buy into Myanmar Field

ONGC Videsh and GAIL, the two Indian partners in Daewoo's recent Shwe gas discovery off Myanmar, may have to buy their way into the field as they did not contribute to the drilling cost of the first well.

OVL and GAIL, who together hold 30 percent interest in the A-1 gas block in Bay of Bengal, may have to pay a penalty for not contributing their share of drilling cost, industry sources said.

The Shwe-1A sidetrack well, which discovered a field with estimated reserves of between 4 trillion and 6 trillion cubic feet of gas, was drilled at sole risk by South Korea's Daewoo and compatriot Kogas.

"OVL and GAIL will need to pay their share of drilling cost besides a penalty which will be decided after discussions," a senior Kogas official said.

While Daewoo holds 60 per cent stake in block A-1, Kogas has 10 percent. OVL, the overseas arm of Oil and Natural Gas Corp (ONGC), has 20 percent interest and the remaining 10 percent is with GAIL.

Both Myanmar and Daewoo view India as the potential market for the gas discovered in A-1 field and are keen on OVL and GAIL continuing in the consortium.

Last week, Myanmar's Oil Minister Lin Thi was here to solicit a market for the A-1 gas. "We came here to discuss cooperation in hydrocarbon sector and to find a market for gas (found in Block A-1). India is a big market and we are exploring how that can be tapped," Thi had said after his meeting with Petroleum Minister Ram Naik.

Officials said the Shwe-1A sidetrack well encountered 90 feet of net gas pay at a sub-surface depth of between 9611 and 9802 feet.

The Shwe (Gold) field, which covers an estimated 14,900 acres, can produce gas in excess of 100 million cubic feet per day of gas.

A major 3D seismic survey is to be performed over the discovery in March and April ahead of the annual monsoon and an appraisal drilling campaign will begin in November.

First gas could be flowing in 2008 and daily production capacity of the field could reach much more than 500 million cubic feet (equivalent to 90,000 barrels of oil) per day, Thi had said.
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