Santos pulls out of Indian oil and gas blocks

SantosAustralia's Santos wants to exit its two oil and gas exploration block in Bay of Bengal due to delays in getting approvals to start work.

Close on the heels of mining giant BHP Billiton deciding to quit India, Australia's Santos wants to exit its two oil and gas exploration block in Bay of Bengal due to delays in getting approvals to start work.

Santos, Australia's third-largest oil and gas producer, was in February 2007 awarded two blocks south-east of Kolkata, has written to the government saying it has not been able to carry out exploration in the area because of defence restrictions and maritime boundary dispute with Bangladesh.

It offered to surrender the blocks NEC-DWN-2004/1 and NEC- DWN-2004/2 on which it has already spent USD 60 million.

Santos had won the blocks, that lie close to Bangladesh border, in the 6th round of New Exploration Licensing Policy.

While an email sent to the company remained unanswered, an official at its India office declined to comment saying "it was a matter between Santos and the government of India."

Sources said Santos told the government that exploration work at the two blocks had to be halted after Bangladeshi authorities raised a dispute about India's right to explore hydrocarbon reserves across the International Maritime Boundary Line (IMBL).

Thereafter, Santos invoked force majeure, which was agreed by the DGH and put into effect from November 17, 2009, when it had suspend its seismic operations in the blocks.

Separately, the Ministry of Defence prohibited carrying out of E&P activities in the block NEC-DWN-2004/1 and provided conditional clearance in respect of NEC-DWN-2004/2.

Santos was of the view that the MOD restrictions on the two blocks will not be lifted in near future, they said.

With its "legitimate expectations" with regard to its investment not being satisfied, Santos felt the best way forward was to return the contracts for the two blocks to the Government without any ongoing obligations for either party, financial or otherwise.

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