Cairn India discovers oil and gas in KG basin

Cairn India discovers oil and gas in KG basin

Mumbai: Cairn India, in which London-based Vedanta Resources is looking to pick up a majority stake, has discovered oil and gas in an onshore block in the Krishna Godavari basin, the company said on Monday.

The company has informed Indian regulator directorate general of hydrocarbons (DGH) about the discovery, Cairn India said in a statement.

The discovery was made at the Nagayalanka-1z well in the KG-ONN-2003/1 block, which is operated by Cairn with an a 49 percent participating interest. State-run explorer Oil and Natural Gas Corp holds the remaining 51 percent.

A flow of 75 barrels per day of oil and 0.27 million cubic feet per day of gas was achieved at the well, Cairn said.

The well is being evaluated to assess the commercial potential of the discovery, the company said.

On 16 August, Vedanta Resources said it would spend up to $9.6 billion to buy a majority stake in Cairn India, the Indian unit of the UK’s Cairn Energy.

In August 2009, Cairn India began pumping crude from its block in the Mangala oil field in the western Indian state of Rajasthan, the first major crude oil discovery in the energy-hungry nation in two decades.

The firm holds a 70% stake in the Rajasthan oil block, called RJ-ON-90/1, while ONGC holds the balance.

The deal with Vedanta needs Indian government approval because Cairn India has production-sharing contracts (PSCs) with the government for oil and gas exploration blocks. According to the agreement, any ownership change will need federal approval.

Approval from partner ONGC is also crucial for any change of ownership.

Media reports on Monday said Vedanta’s proposed acquisition may be scuppered by petroleum ministry. One said the ministry wanted the ONGC to be given a chance to buy the holding, while another said state-owned ONGC, OIL India Ltd and GAIL might make a joint bid to counter Vedanta.