Oilex Says India's Cambay Field Demonstrates Strong Economics

Oilex on Friday said the Cambay field in Indian state of Gujarat is expected to have robust economics, despite the recent sharp drop in oil prices.

“The well economics are underpinned by the significant excess of demand over supply within the Indian domestic economy, which is forecast to grow,” the company said. 

Oilex has concluded two gas sale agreements (GSA) to date.  Gas sale contracts are conducted via a bid system, with buyers submitting offers to purchase via a tender process. 

“Given the demand for gas by nearby industrial users, strong pricing is secured, above the floor price recently established by the Indian Government,” Oilex added.

According to the company, existing industry located within 15km of the Cambay field means very low capital cost is associated with sales of gas to the local market and the tie-in to existing gas transmission pipeline network. The network has excess capacity for additional gas that can be used for gas from the Cambay field.

“The robust indicative economics of the Cambay field remain, despite the sharp decline in oil prices. The fall in the oil price does impact the total revenue generated by the Cambay field, but this is more than offset by the 250 percednt increase in the oil gas ratio.  The premium gas market in India also means that the Cambay field is economic even when we exclude oil revenues from our modelling,” Managing Director of Oilex, Ron Miller, said.