Hardy Renews Effort for Extension at CY-OS/2

Hardy Exploration has renewed efforts to secure an extension at its offshore Tamil Nadu block CY-OS/2 despite being asked to relinquish the block in April 2004.

Hardy and its partner GAIL have sent several letters to the oil ministry pleading that an extension is required to finish the work program left incomplete due to the 22-month delay blamed on licensee ONGC.

On October 4th, Hardy wrote another letter to the oil ministry repeating its case for a 22-month extension, promising to do more exploration work than originally committed.

"The CY-OS/2 consortium is keen to retain the block," writes Hardy. "After discussions GAIL, the partners have mutually agreed to further increase the committed work program in exploration Phase-III". This additional work program includes shooting 300-sq km 3D and drilling one more exploration well. The minimum work program committed in the PSC during 'Phase-III' provided for one exploration well only.

Continues Hardy: "Our total committed work program represents a very significant enhancement over the PSC minimum work program of one well and demonstrates the JV's commitment in seriously taking up exploration activities in the block."

Hardy says it has an "experienced technical team, which has, since inception, worked extensively on the geology of this block, developed leads/prospects and acquired an in-depth appreciation of the physical/logistical issues involved in drilling in the Cauvery basin."

Hardy said the fresh work program plans for 'Phase-III' would require 22 months to complete "because of the additional drilling and because of the intervening weather windows in the Cauvery basin, during which seismic and drilling operations have to be curtailed."

Hardy's request involves extending the PSC's seven-year exploration phase. "The case will have to again go before the Empowered Committee of Secretaries because the term of the contract has already expired," says an oil ministry source.

"We will take it to the ECS but there's no guarantee what decision will emerge from the meeting."

In April 2004 the ECS turned down the Hardy-GAIL request, fearing that an extension for the consortium would set a precedent for other operators. But this time the DGH is strongly backing the Hardy-GAIL request and has written to the ministry supporting the case for extension of 'Phase-III' on this "complex exploratory block".

More, the DGH also points out that the consortium's fresh work program commitments, if 'Phase-III' is extended, would mean an investment of around $20m as against the $4m committed in the PSC during this phase.

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