BP (British Petroleum) has informed the petroleum ministry that exploration activities in its block KG-DWN-2005/2 has been hampered due to defence ministry requirements for testing and exercises in the area.
In a communication to the ministry, BP stated that it has an interest in the Block KG-DWN-2005/2, which was awarded to RIL under the NELP VII bidding round. It further informed that a major portion of the block falls within the ‘Impact Zone’, which will clearly impact and prohibit any construction of permanent structures as well as interfere with petroleum operations. Given that 70 per cent of the Block area falls under the Impact Zone required for Navy and DRDO testing, the Block practically becomes a ‘No Go’ Zone for continuous exploration and subsequent development activities thereby preventing contractors from carrying out petroleum operations. Furthermore, as the area of the Block is relatively small of size 1949 sq. km., flexibility to make any design changes to mitigate the impact of the defence ministry requirements is severely restricted.
BP stated that the block is currently in the early stages of exploration period and there is no clear view on its prospectivity. Secondly, any further exploration operations will be constrained as they need to be managed with respect to Naval and DRDO testing and exercises. Finally, even if any hydrocarbons are discovered, they cannot be produced as contractors would be prohibited from installing any permanent infrastructure in support of petroleum operations.
The Company mentioned that the defence ministry requirements have led to the introduction of significant risk and high uncertainty beyond the control of contractors. In view of this, the company would be unable to progress any further exploration operations within the Block.
BP also said that due to this, it is prepared to relinquish the KG-DWN-2005/2 block but it is ready to discuss possible options in lieu of such relinquishment. It also stated that as petroleum operations may not progress due to the above described circumstances, the relevance of Minimum Work Programme becomes unclear. However, it indicated that it is willing to consider an option to carry out a similar level of activities if equivalent new acreage is given in a mutually agreed area for exploration.