ONGC nod to Cairn’s Rajasthan gas production plan

The board of Oil and Natural Gas Corporation (ONGC) has given its nod to Cairn India’s gas development plan for Rajasthan fields.

This ends the speculations that the two partners of Rajasthan block were not on the same page regarding gas production as well as equity structure in the joint venture.

According to sources associated with the joint venture, the ONGC board in its meeting earlier this month had approved the plan to increase production from the Raageshwari Deep Gas fields in the Rajasthan block to 100 million standard cubit feet a day (2.83 mscmd) by fiscal 2017.

Cairn had submitted a revised development plan to ONGC in April.

While ONGC was still deciding on the plan, there were hints of the public sector company wanting to raise its stake in the block from the current 30 per cent (Cairn India owns 70 per cent), and using delaying tactics to get its way. According to the Rajasthan production sharing contract (PSC), the operator can get unconditional extension for five years if it is producing oil, and 10 years in case of expected gas production.

But this extension will be on terms mutually agreed between the two parties. The Rajasthan PSC expires in 2020.

While sources did not disclose ONGC’s position on increasing its stake in the block, they said the Board has approved the development plan submitted by Cairn, and now, the block oversight body – management committee – has to give its nod.

In the short term, Cairn India is on course to double the Raageshwari Deep Gas daily production by the fourth quarter of the fiscal 2015. At present, it is producing 0.25 mscmd of gas.

Meanwhile, it has floated tenders in the market for constructing a gas processing terminal, availing itself of drilling and fracking services.

Cairn India is also leaving no stone unturned to exploit the full resource base of 300,000 barrels of oil equivalent per day from its Barmer block.

In December, it will conduct roadshows in Calgary (Canada) and Houston (US) to tap into the oil field services companies, offering technology and technical solutions.

Calgary and Houston are major hubs for oil field services companies that have taken significant strides in providing oil field technical solutions.