Essar Oil Transfers Stake in Offshore Wells to Petrom

Petrom and Essar Oil have reached an agreement whereby Petrom would bear the entire amount of expenses for the second and third phase of exploration of the BB-OS/5 field offshore Saurashtra, Inda. In return, Essar Oil, which is the partner company in the venture, has agreed to transfer 30 percent stake in the exploratory wells to Petrom, which is also the operator of the fields. The transfer proposal is pending with the Union ministry of Petroleum and Natural Gas for approval.

This agreement would increase Petrom's stake from 21 percent to 51 percent, while Essar Oil will have 49 percent. The total expenditure for the second phase is approximately $10 million. The second phase of the program began in 1999 but was extended by 17 months up to March 31, 2002. The optional three-year phase-III of the program which involves two exploratory wells each to target depths of 2,500 meters is scheduled to begin soon.

The PSC for the third phase spread across 9,095-sq km was signed by both the companies in 1996. Petrom has completed 1,670-km 2D on the block. The PSC for BB-OS-5 in South Saurashtra offshore was signed by Essar Oil in October 1996. Essar Oil had 100 percent interest and was the operator for this block.

In the first phase, Essar Oil acquired in excess of 500 km of 2D seismic data and integrated it with seismic data earlier obtained by ONGC. Almost $1 million was spent on this work. Attractive prospects were identified based on the study of this seismic data. Petrom, seeing an opportunity for entry into the exploration and production business in India, decided to farm-in to this block with 21 percent participating interest and assumed operatorship after receiving government approval. In the second phase, Petrom as operator drilled one exploratory well.