Cairn Oil & Gas, a unit of Vedanta Ltd has has secured approval from the union ministry of petroleum & natural Gas (MoPNG) to extend the production sharing contract (PSC) for its Rajasthan block until May 2030.
The contract extension will apply for a period of 10 years, from May 2020 till May 2030. The initial licence to explore and produce oil and gas from the Barmer block expired on May 14, 2020. The government had agreed to a 10-year extension but it wanted a higher share of oil and gas from the block as well as settlement of ₹5,651 crore dispute over cost recovery for the same.
“The government of India (GoI) accorded its approval for extension of the PSC under the Pre‐NELP Extension Policy, as per notification dated April 07, 2017, for RJ Block by a period of 10 years with effect from May 15, 2020 vide its letter dated October 26, 2018, subject to fulfilment of certain conditions,” Vedanta said in a regulatory filing.
Prachur Sah, Deputy CEO, Cairn Oil & Gas said: “Home to prolific fields, the Rajasthan block demands extensive investment in technologies to enhance recovery. The field also carries potential for new explorations. For these opportunities, especially, this contract extension will be significant. The Rajasthan block is also home to our unconventional shale exploration, and we are confident that this contract will now enable us to streamline operations and enhance investment in this very prolific block.“
“We are firm in our overall vision of contributing 50% to India’s domestic crude production and we will do this by committing an investment of $5 billion and achieving production of 500,000 barrels of oil equivalent per day,” he added.
The block, with 38 discoveries, till date, has total in place hydrocarbons of 5.9 billion barrels of oil equivalent (bboe). The block has cumulatively produced more than 700 million barrels of oil equivalent (mmboe) in the last decade. This contract extension will spur capex investment and encourage private players entering this critical sector.
Cairn Oil & Gas recently won 8 oil blocks and one Coal-Bed Methane (CBM) block under the DSF Round III bids, taking the company’s total assets in the country to 62. Now, the PSC extension for Rajasthan block will play a driving role in enabling the company enhance India’s domestic crude abilities and take the country towards energy security, the statement said.
In October 2018, Centre had agreed to extend the contract for Barmer fields in Rajasthan for 10 years after the expiry of the initial 25-year contract period on May 14, 2020, however, the extension was subject to the company agreeing to raise the share of the government’s profit from oil and gas produced from the block by 10%.
“The issue of application of extension policy to this extension is pending before the Supreme Court of India,” the Vedanta filing added.
