MoP endorses Shell''s failure in offshore project

The Ministry of Petroleum (MoP) has endorsed Shell''s failure in offshore drilling project in Indus E basin and allowed its abandonment. Sources said that Ali Khan of Shell in his letter written to MoP had said: "After failing to find carbon in Anne-IX, we now request DGPC for approval of its abandonment".
Official endorsement of any drilling project is needed in each case as per government rules. It brings the project to an end. In the case of Shell''s offshore project, things were pretty different. Its public sector joint venture partners were at loggerheads with Shell and, after the failure of the project, their boards would question the whole process of drilling at excessive cost.
The aborted drilling cost $60 million and, being partners for 50 percent, they have to at least bear $30 million. OGDC and PPL were partners for the project with Shell--against their will. It is an open secret now in oil and gas exploration business that at least one former OGDC managing director and senior official of the ministry had to either go home for resisting the top brass of the ministry for joint venturing for the project.
Shell''s offshore project and its comparatively higher cost will keep on haunting the policy makers who pushed OGDC and PPL to join with Shell in the project. Another unanswered question is why OGDC and PPL did not undertake offshore project on their own, and arranged services for operation when they have a few billion dollars in their accounts. Can one look into the matter and probe why one former OGDC managing director in a meeting reacted sharply, saying: "I will prefer to resign and go home instead of joining Shell for the project".
The project had a typical history, and different from Pakistan''s efforts made in the past to explore possibilities of carbon presence in its territorial waters. Its cost went up, by at least 300 times, due to long delay and non-availability of ship-mounted rig for years. The project was conceived in 2004, and its cost was estimated at $18 million.
Rising cost and unnecessary expenditures were a bitter controversy. PPL had raised serious concerns over the rig condition and deplored that the operator did not get third-party certification for proper maintenance, and said the rig could not function properly when it was tested in sea waters, which delayed start of drilling and increased the cost.
During the drilling, a serious problem of mud-leaking created a lot of complications for the drilling crew. The structure''s prospects, too, remained controversial. Now, when the drilling hole has gone dry, it''s going to demand some new approach from the public sector companies and other government authorities for any future initiative for offshore drilling.