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In 2009 the joint venture applied to the Ministry of Petroleum
and Natural Gas of the GOI to establish
commerciality of the Ganesha gas discovery during an appraisal
period ending January 2012 as provided
for in the production sharing contract (‘PSC’).
On 20 February 2009 HEPI received a communication from DGH to
establish commerciality within 15 days or relinquish the block. We
believe that this action was taken by DGH on the assumption that
the Ganesha discovery was an oil discovery. As Ganesha is a
non-associated gas discovery, the CY-OS/2 PSC provides for an
appraisal programme to establish commerciality by January 2012.
Hardy has
subsequently presented a case to the DGH that supports its claim
that the CY-OS/2 joint venture is entitled to a licence extension
as the result of a non-associated gas discovery. In the absence of
a resolution in our favour in the near future, the Group intends
to refer the dispute for sole expert or conciliation and
arbitration.
Should the joint venture
receive confirmation of the extension period in a timely manner,
Hardy will undertake the activities necessary to fully appraise
the Ganesha discovery. It is unlikely that an appraisal well will
be drilled in 2010.
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