The Hindu Business Line : Hydrocarbons ‘discovery’ definition may be altered

New Delhi, Aug. 5 A significant change in the definition of hydrocarbons ‘discovery’ could be in the offing for the oil and gas exploration companies. The Petroleum Ministry, which is considering certain changes in the model production sharing contract (MPSC) for the forthcoming auction rounds, may allow companies to adopt modern day methods of testing the hydrocarbons flow.

Under the present MSPC, a discovery means only those finds that have not previously existed and can be recovered at the surface in a flow measurable by conventional testing methods.

The Ministry is now proposing to do away with the term ‘conventional’ and replace it by ‘flow measurable by petroleum industry testing method’.

This would not only bring down the exploration cost, but also help save on time, industry players such as ONGC and Reliance Industries Ltd (RIL) opine.

A senior official told Business Line, “This proposed change, if accepted, would be applicable only on future contracts including those for the seventh round of New Exploration Licensing Policy (NELP).”

However, in case of earlier contracts, if the company and the Government are agreeable, then there always is a possibility of considering a change, he added.

This proposal of the Ministry gathers significance in the backdrop of the recent difference between ONGC and the Directorate-General of Hydrocarbons (DGH) over the testing methods.

The DGH had disallowed ONGC find in the Krishna Godavari basin on the grounds that conventional testing methods were not adopted.

According to industry experts, globally, it is a practice to adopt modular dynamic test (MDT) method, which consumes less time and is cost-effective.

In fact, private sector major Reliance is known to carry out most of its tests through the MDT method. According to a RIL official, the company carries MDT where the geological control is sufficiently good, giving a complete knowledge of the reservoir.

An analysis of the two methods shows that the companies would end up saving almost Rs 15 crore per test if they adopt MDT method.

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