Hindustan Oil Exploration Company Ltd (HOEC) has announced the commencement of production of natural gas from PY-1 Field in the Cauvery basin. In a communique to the Bombay Stock Exchange (BSE), the company said the natural gas from this field would be supplied to GAIL (India).
Pursuant to the production sharing contract for PY-1 Field, Chennai Petroleum Corporation Ltd (CPCL), is designated as the Government nominee for purchasing the condensate. The company expects PY-1 Field to generate an annual revenue in excess of USD 65-million upon reaching first plateau production. The company said it has 100 per cent operated participating interest in the said field.
Five years back, HOEC first got the approval to take over the operatorship of PY-1 Field. "We expect PY-1 to reach first plateau production of around 50-million scfd. The natural gas from this field shall be supplied to GAIL (India) Ltd under a long-term contract," HOEC Chairman R Vasudevan told shareholders at the company's Annual General Meeting (AGM).
The company has made, in aggregate, a capital expenditure of approximately Rs 1,033 crore over the last three-years in terms of asset creation, which is nearly three times the capital spend since inception.
"We remain in an intensive capital investment phase as the company is uniquely placed in addressing and monetising appraisal and development opportunities in its existing portfolio. To finance this growth, the company needs financial resources in the immediate term," Vasudevan said.
Besides development of the PY-1 project during the year, the company, as operator, acquired 3D seismic data in the Assam acreage. "We are processing the seismic data and based on the interpretation results, we expect to drill appraisal wells in 2010 to delineate the Dirok discovery," Vasudevan said.
"We have been operating the North Balol, Asjol and Pramoda Fields in an incident-free environment with a focus on cost to ensure profitability in these small-sized fields."
The company has been successful in acquiring two exploration acreages in Rajasthan basin under the NELP VII Round. The production-sharing contracts for the same were signed with the Government of India in December 2008.
In July 2009, the State Government also granted the petroleum exploration licenses for these blocks and planning is underway for environment and survey-related activities, Vasudevan said.