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Cairn India may have to bid for and win it to bag the rights to explore the Barmer block in Rajasthan, which it had surrendered to the Government.
According to the current norms, surrendered areas are to be auctioned once again and the contractor who wins the bid will get the right to explore for oil reserves.
“We can only do whatever is possible under the production sharing contract. They, I think, will have to bid for it,” M. Veerappa Moily, Minister for Petroleum and Natural Gas, told Business Line. Cairn has surrendered almost two-thirds of the block to the Government. But, now based on its recent assessment, the company believes the block may hold more oil reserves than initially assessed. To exploit these, the company wants to explore the surrendered area.
Clear stance
Asked if the Ministry would leave the issue for the Cabinet to decide, Moily said, “Whether it is proper to approach the Cabinet on this, is a question. We do not want anybody to question (point fingers at) us.”
Ministry officials have had a clear stance since the day Cairn made this request. Their view is that, giving back (on nomination basis) any area previously surrendered is not legally tenable.
A senior official had told Business Line that Cairn would have to participate in the future licensing round or Open Acreage Licensing Policy, and then win the bid .
Besides, approaching the Union Cabinet to consider the request could mean deviating from the Government’s exploration policies, and any decision in its favour could lead to fractious debates, which Moily does not want. If the Cabinet does consider Cairn’s request and approves it, this will be the first such case in the Indian exploration and production business so far.
Increasing output
The block initially covered 11,108 sq km, while the licence to explore and develop was given for 10,558 sq km. After completion of each exploration phase – which is divided into three – the joint venture (Cairn holds 70 per cent and ONGC 30 per cent, in the block) had to relinquish some of the unexplored area to the Government, as prescribed in the norms.
The joint venture today has 3,110 sq km area of the block and is producing close to 180,000 barrels of oil a day. The joint venture targets to close 2013-14 at a production rate of 200,000-225,000 barrels of oil a day from the block.
According to the company, the total resource base supports a vision to produce 300,000 barrels of oil a day (equivalent to a contribution of more than 35 per cent of India’s current domestic crude oil production), subject to further investments and regulatory approvals.
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