India-focused Hardy Oil and Gas still looks frustratingly some way off from tapping deepwater gas discoveries found in the D3 block off the east coast in the Krishna Godavari basin, while military chiefs consider the implications for petroleum operations in part of the license area and the Indian Government continues to review the Declaration of Commerciality.
Hardy has made four apparently viable gas discoveries in the KG-DWN-2003/1 D3 license block and is keen to go ahead with a subsea gas cluster development.
But the project has been held up while the Indian government called for a flow test on one of the finds, W1, before it will accept a Declaration of Commerciality submitted for the D3 license, which includes two other gas discoveries, Dhirubhai 39 and 41.
Development has also been stymied by a restriction on petroleum operations in the south-eastern sector of the license area, imposed by the Defence Research & Development Organisation of India.
While a recently-held block management committee meeting considered outstanding issues, operator Reliance Industries has spelled out that further activity depends on clarity being provided over the DRDO’s restrictions on petroleum operations, Hardy reported in an interim statement. Further exploration is also dependent on a 12-month license extension applied for last year.
Hardy says it aims to recommence exploration drilling once DRDO restrictions are clarified and after the licence extension is approved.
None of this looks likely to happen soon, however, and Hardy is some way off from progressing the project: “The government is currently reviewing the Declaration of Commerciality and only once they have got that through will FEED studies be initiated,” a Hardy spokesman told DI.
Furthermore because the license for D3 is a Production Sharing Contract, all gas in the block has to be sold domestically. Reliance and BP are understood to be in a major dispute with the Indian government over the price for gas, primarily in another block, D6, but that will have ramifications for D3.
“The GOI’s [Government of India’s] review of the D3 DOC [declaration of commerciality] proposal will likely continue through to the completion of exploration Phase I,” Hardy notes in its statement, adding: “Clarity regarding the gas pricing framework should facilitate the review of the DOC.”
Hardy has previously indicated a proposed development for D3 with a dry gas subsea cluster project, with flexibility for further wells and adjacent discoveries in the future.
The D3 license covers 3,288 sq km (1,269 sq miles) in water depths ranging from 400-2,200 m (1,312-7,216 ft), 45 km (28 miles) offshore. It is operated by Reliance with a 60% stake, partnered by Hardy (10%) and BP (30%).
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