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DGH writes to Sebi on Cairn’s announcement

DGH writes to Sebi on Cairn’s announcement
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First Published: Fri, Mar 26 2010. 11 19 PM IST

Photo: Bloomberg
Photo: Bloomberg
Updated: Fri, Mar 26 2010. 11 19 PM IST
The directorate general of hydrocarbons (DGH) has written to stock markets regulator Securities and Exchange Board of India (Sebi), saying that there are only 2.1 billion barrels of oil equivalent (boe) of approved resources at Cairn India Ltd’s Rajasthan field.
Photo: Bloomberg
The India unit of UK-based Cairn Energy Plc had on Tuesday raised estimates of in-place reserves at its Rajasthan field to 4 billion boe from 3.7 billion boe. The company had also lifted its estimates on potential reserves to 6.5 billion boe from 4 billion boe.
In a communication dated 26 March to C.B. Bhave, chairman of Sebi, director general of hydrocarbons S.K. Srivastava has stated that resources for the Rajasthan block (RJ-ON-90/1), for which the estimates have been raised, is “2.1 billion boe only”.
Mint has reviewed the letter.
While Cairn is the operator in the block, state-owned Oil and Natural Gas Corp. Ltd (ONGC) is the licensee and a partner in the field with a 30% stake.
The Rajasthan field is the country’s largest onshore petroleum deposit.
“According to Sebi guidelines, it is our duty to inform them. Had the operator said certified reserves, we wouldn’t have said anything,” said a DGH official who did not want to be identified due to the sensitive nature of the issue.
“Those fields for which the field development plan has been approved by the management committee, which constitutes of representatives from government of India, DGH, operator and the licensee, the resources are 2.1 billion boe,” the official added.
Cairn shares had jumped after the forecast of higher output at its Rajasthan field.
On Friday, Cairn India shares fell by Rs3.45, or 1.16%, to close at Rs295 on the Bombay Stock Exchange. The exchange’s benchmark Sensex index rose by 85.91 points to end at 17,644.76.
“While it (revised reserve estimates) is a very good news from the energy security viewpoint, but as far as I am concerned I will go by DGH certification,” Jitin Prasada, minister of state in the petroleum and natural gas ministry, told Mint.
A Cairn India spokesperson on Friday declined comment on the story.
“The recovery potential has doubled from 700 million barrels to 1,400 million barrels, with the plateau production increasing from 240,000 bpd (barrels per day) from the earlier approved plateau production of 175,000 bpd,” Rahul Dhir, chief executive of Cairn India had said at the time of the announcement on Tuesday.
Production of the waxy crude oil from the Rajasthan field is around 25,000 bpd, which the company expects to ramp up to 125,000 bpd by the second half of this year.
utpal.b@livemint.com
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First Published: Fri, Mar 26 2010. 11 19 PM IST