Cabinet approves three-year drilling moratorium for oil explorers

New Delhi, July 8 (ANI): The Cabinet Committee on Economic Affairs (CCEA) today decided to give a three-year drilling holiday or moratorium to firms such as state-run ONGC and Reliance Industries.

The CCEA approved a drilling holiday from January 1 2008, to December 31 2010, for 30 blocks awarded in the fifth round of NELP.

The main objective of the drilling moratorium dispensation is to enable the contractors to meet the drilling commitments under various PSCs, which have been adversely affected on account of world-wide shortage in availability of deepwater rigs since 2007 due to the then prevailing high crude oil prices.

Globally, oil and gas explorers are faced with huge shortage of drilling rigs as countries stepped up oil and gas hunt in the wake of the surge in crude oil prices in 2008. Day-hire charges for a deep-sea drill rig had shot up 250 percent between 2007 and 2008.

But for the drilling holiday, the companies faced huge penalties for not fulfilling their work commitments that included drilling of a certain number of wells. (ANI)