Upstream oil and gas regulator Directorate General of Hydrocarbons (DGH) has rejected Cairn India’s request to restore around 8,000 sq km of area that it relinquished about a decade ago at its Barmer block in Rajasthan.
The company currently holds the 3,111 sq km at the Barmer block (RJ-ON-90/1) where it has made 26 discoveries so far.
A DGH official told FE that the restoration of the block was denied as the production sharing contract (PSC) that Cairn India signed with the government did not permit the restoration of the acreage.
The PSC states that the exploration period of seven years ended on May 2002. Any acreage that has not been explored or appraised within that timeline has to be returned to the government. The relinquished acreage can subsequently be auctioned by the government in future NELP rounds.
In a letter to the oil ministry dated April 5, 2013, Cairn India chief executive P Elango sought the restoration of 11,108 sq km block that it originally held when the PSC was signed with the government in 1997.
“As the company has technical and scientific knowledge over the relinquished area, this would enhance the chances of exploration success,” Elango said in the letter.
To date, Cairn India’s 26 discoveries in the block put its in-place reserves at around 7.3 billion barrels of oil equivalent. The Mangala, Bhagyam and Aishwarya fields constitute Cairn India’s main assets in Rajasthan. The company has given a guidance for exiting FY14 at production levels of 200,000-215,000 barrels of oil per day (bpd), against current production levels of 175,000 bpd.
The block was initially held by Royal Dutch Shell in 1995. Cairn subsequently bought the block.
Cairn India has also approached the oil ministry for a fast-track clearance of its R5,000-crore integrated block development plan (IBDP) at its existing Barmer block spread over 2013-16. The government does not give blanket investment approvals until the discovery has been
established as a commercially viable one.
The company claims that the IBDP can reduce the lead time between discovery and production from 36 months to 18 months and enhance production of hydrocarbons