The Telegraph
Since 1st March, 1999
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UK company joins oil hunt in Assam

New Delhi, Jan. 23: Petroleum minister Ram Naik has given the go-ahead to UK-based Premier Oil to join the oil hunt in Assam.

The proposal had been stuck for a year at a time when oil exploration is being undertaken on a war footing. The UK firm had set up a shell company as its subsidiary in India to take up exploration work in AAP-ON-94 block in Assam.

The other partners in the consortium are Indian Oil Corporation, HOEC, also an Indian company, and Unocal of the US. As operators of the block, Premier Oil will handle the day-to-day exploration work.

Both the directorate general of hydrocarbons and the petroleum ministry are of the view that a mere guarantee from the parent company was not enough for it to be eligible to start operations. The UK company was then asked to deposit around $ 1 million to establish its net worth.

However, the directorate general of hydrocarbons dithered on the proposal.

The company was keen to get a clearance, as it wanted to start drilling work before the onset of monsoon. Any further delay would have held up operations by another year, as drilling cannot be undertaken once the rains set in.

The petroleum minister is keen to induct more foreign know-how to strengthen Indian exploration efforts. He is, therefore reported to have personally intervened to expedite the approval.

The fact that Cairn Energy of the UK has struck gas or oil in most of the blocks that it has explored is reported to have strengthened the case of Premier Oil as well.

Although none of the finds of Cairn Energy can be categorised as ‘big’, it has made the most of Indian geological structures.

The crude production in Assam has fallen short of the needs of the refineries in the state. The government is keen to step up the oil output in the Northeast, not only to increase self-reliance but improve the economics of the downstream refinery business as well.

The crude output from the Northeast has registered a decline in recent years and currently hovers around 5 million tonnes a year.

ONGC and Oil India Ltd have also drawn up plans to increase this output to 6 million tonnes.

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