French, Canadian and Indian firms win blocks in India's northeast

It may turn out to be the world's largest crude oil and natural gas reserves.
A consortium of French, Canadian, and Indian oil companies is expected to begin exploration work in India's mountainous north-eastern state of Arunachal Pradesh, an official said.

An Indian petroleum ministry official said the federal government awarded exploration rights for the 295-sq-kilometer block in Arunachal Pradesh, bordering China and Myanmar, to a consortium of three companies as part of a global bidding process.
"The consortium includes operator Geopetrol International of France and Canoro Resources of Canada, both of which have 30 % stakes each, besides India's National Thermal Power Corporation with 40 % interest in the project," the official told.

Geopetrol, a subsidiary of the French Geofinance Group which operates in 80 countries worldwide, and Canoro have been jointly engaged in exploration work in the oil-rich north-eastern part of India for the past decade. The two companies are now part of the producing Kharshing oilfield in Arunachal Pradesh that they began exploring in 1995.
The official said the exploration contract was awarded for a seven-year period followed by a 20-year production term for any commercial discovery. A five-year extension is possible in the event of commercial viability.

"The consortium is expected to carry out 2-D and 3-D seismic surveys and at least seven wildcat drillings of up to 2,000 to 4,000 meters in the next three years," the official said.
"No wells have been drilled on the block and there is limited seismic coverage over the area where the consortium has been assigned carry out the difficult task."

India produces about 30 mm tons of crude oil annually, with the northeast accounting for about 6 mm tons of the total. National Thermal Power is a state-owned electricity generation firm. The exploration in Arunachal Pradesh would be the company's first venture in the upstream oil and gas business.
Meanwhile, state-owned Oil and Natural Gas, India's biggest company by market capitalization, plans to spend about $ 750 mm to double its crude production in the northeast in the next three years.

Oil and Natural Gas currently produces 1.5 mm tons of crude in north-eastern Assam state.
"We have taken up a slew of strategies to increase production to about 9 mm tons annually by 2008 in the northeast," the petroleum ministry official said.