PETROWATCH learns the ONGC board last month agreed to sign the relevant documents that will legally bring Tullow and Reliance into the picture. Tullow and Reliance are still waiting to be officially informed of the ONGC decision.
When that happens it will put an end to a saga that began in November 1999 when US-based Okland International, the 100% equity stakeholder in the block, informed ONGC of its intention to assign 90% stake to Tullow India Operations Ltd and retain the balance 10%. ONGC had the option to match Tullow's offer within a month but decided against it. Okland was informed of ONGC's decision.
As licensee of the block, ONGC had to first agree to Okland's assignment to Tullow before the oil ministry approved the change. Nothing moved for a long time and rumors surfaced that ONGC was trying to extract a price from Tullow for its approval.
Okland continued to have 100% participating interest. Some two years ago, Reliance entered the picture with its 40% farm-in and operatorship. But the assignment from Tullow to Reliance was meaningless unless the first assignment from Okland to Tullow was made official. To complicate matters further, CB-ON/1 straddles Gujarat and Rajasthan, who both delayed issuing a Petroleum Exploration License, without which work cannot begin.
In September last year Gujarat finally granted a PEL for the portion of the block in its territory and in April this year, Okland told ONGC of Reliance's entry as operator into the equity structure. ONGC was asked to agree the change, which it has now done.
A PSC for this 6,133-sq km block was signed in July 1998. The three-year 'Phase-I' work program consists of reprocessing 500-km old seismic data and acquiring, processing and interpreting 600-km fresh 2D. During the 2-year 'Phase-II' and 2-year 'Phase-III' of the exploration period the operator is committed to drilling one well each to a target depth of 2,000 meters. ONGC drilled 11 wells on this block before the oil ministry offered it under the 7th licensing round. Only one well showed hydrocarbons. If Reliance makes a commercial discovery, ONGC has the right to take 30% participating interest.
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