Two of India’s top most oil and gas exploration giants, Cairn India and ONGC have entered into a joint venture partnership for a project in Rajasthan. It is Barmer’s Hydrocarbon block in country’s largest state that has generated concern of both Cairn and ONGC to draw up a 10 year long developmental roadmap.
This hydrocarbon block in Barmer, Rajasthan has a current lease of 10 years exact. But the plan dealt by Cairn India and ONGC will bring an extension to this lease period. An expected increase of 10 years will be sought for once the present lease ends in 2020.
It was last on 28th July when Delhi High Court asked the centre to make up their mind ‘in 5 weeks’, related to extension in the production sharing contract for Barmer’s hydrocarbon block which is presently covering over 3,111 sq kms.
On this order from the court, Chief financial officer and interim CEO of Cairn India, Sudhir Mathur, stated that “The PSC matter is sub juiced. Pursuant to the Delhi High Court’s directions, ONGC in the capacity of the contractor (as per the PSC) communicated its consent to the extension of PSC on the same terms and conditions for a period of 10 years. Now the court has mandated the government to provide its decision within five weeks from the last hearing held on July 28, 2016.”
The roadmap which is being talked about will be made on the basis of current reserve related knowledge the explorers are having.
Mathur said, “We are working on key growth projects namely Raageshwari Deep Gas (RDG), Mangala enhanced oil recovery (EOR) and two EOR projects at Aishwariya and Bhagyam. We are confident that in the next six to nine months, we would be able to deliver 18% IRR (internal rate of return) in a $50 oil world. We expect to see returns from these investments by 2019. This financial year, we are on track with our guidance of maintaining the Rajasthan production broadly at FY16 level.”
Since recommencement of exploration in Rajasthan’s Barmer block in 2013, Cairn India has announced 13 novel discoveries, which tool the total count to 38. In FY16, Cairn India’s Rajasthan block single-handedly contributed Rs.9, 099 crore to both national and state exchequers. In their joint venture partnership, Cairn India and ONGC hold the Barmer assets in 7:3 ratios. By contributing to almost 23% of domestic crude production of our country, Rajasthan’s block has considerably reduced crude oil imports from other countries.