Govt grants 3-year drilling holiday to oil exploring cos

The decision to this effect was taken by the Cabinet Committee on Economic Affairs chaired by Prime Minister Manmohan Singh.

“The CCEA has approved the grant of drilling moratorium of three years to all deepwater blocks awarded under various rounds of bidding till the fifth round of the New Exploration Licensing Policy (NELP), where drilling commitments are pending as on January, 1 2009,” Home Minister P Chidambaram told reporters after the cabinet meeting.

Rounds of bidding
Drilling activities have been severely affected in as many as 30 deep-sea   blocks, which were awarded in various rounds of bidding under the NELP because of shortage of offshore drillings, sources in the petroleum ministry said.

These include 16 of the state-owned ONGC and 13 of Reliance Industries Limited (RIL). There has been a sudden spurt in exploration activity world wide since 2007 due to high crude oil prices, which led to acute shortage in availability of deepwater rigs world wide.
The non-availability of deepwater rigs has adversely affected the completion of the minimum work commitments of drilling by various contractors of deepwater blocks.

Chidambaram said the proposal would be implemented immediately and the oil exploration firms would be asked to complete the drilling commitments during the moratorium period of three years.