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Cairn India | News Article Economic Times - Cairn India may get nod to explore rest of Rajasthan oil block
 

Cairn India | News Article Economic Times - Cairn India may get nod to explore rest of Rajasthan oil block

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Cairn India | News Article Economic Times - Cairn India may get nod to explore rest of Rajasthan oil block

Cairn India | News Article Economic Times - Cairn India may get nod to explore rest of Rajasthan oil block

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    Cairn India | News Article Economic Times - Cairn India may get nod to explore rest of Rajasthan oil block Cairn India | News Article Economic Times - Cairn India may get nod to explore rest of Rajasthan oil block Document Transcript

    • e co no m ict im e s.indiat im e s.co m http://eco no mictimes.indiatimes.co m/news/news-by-industry/energy/o il-gas/cairn-india-may-get-no d-to -explo re-rest-o frajasthan-o il-blo ck/articlesho w/25571135.cms Cairn India may get nod to explore rest of Rajasthan oil block By Rajeev Jayaswal , ET Bureau | 11 No v, 2013, 04.00AM IST | With its experience and new technology, Cairn is sure to raise the output at the block and could turn it into India’s biggest producing f ield. NEW DELHI: Oil and gas producer Cairn IndiaBSE 2.11 % could get the government's permission to explore the remaining two-thirds of the prolif ic Rajasthan block, which was relinquished more than 14 years ago by operators including Shell that had previously owned the block. With its experience and new technology, Cairn is sure to raise the output at the block and could turn it into India's biggest producing f ield, surpassing Bombay High, government of f icials and industry executives said. "Sustainability of the Rs 37,000-crore greenf ield ref inery project in Rajasthan is dependent on oil produced f rom this block. We may approach the Cabinet with a proposal to allow Cairn to explore relinquished areas in national interest," said a senior government of f icial. By the time Cairn entered the block as operator, 25% of the area was already relinquished and an additional 25% was relinquished within a short time, denying the company an opportunity to carry out optimal exploration works in the relinquished areas. Cairn India did not respond to ET 's email queries. Shell India Petroleum Development Co (SIPD) initially held the 11,558 sq km block. Cairn took over as operator in 2002 and announced a major discovery in 2005. By then, 8,447 sq km area of the block was already relinquished as per contractual terms, of f icials said. T he Rajasthan oilf ield is currently producing 1,85,000 barrels of oil per day and has in-principle approval to raise the block's output to 3,00,000 barrels over the next three years. T he remaining two-thirds area of the block also has a huge potential, a senior executive said.
    • Vedanta group chairman Anil Agarwal had initiated this proposal about six months ago. In a letter to oil minister Veerappa Moily, he had requested f or restoration of the relinquished area to harness f ull potential of the block, of f icials said. Vedanta group had acquired Cairn India about two years ago. Agarwal had told Moily that 80% of the f inancial benef its would accrue to the government. "As you are aware, we are merely a contractor and overall our share of revenue is less than 20%. We would like to create signif icant value f or the government. We would like to realise your vision to do more exploration and more oil production so our country is less dependent on imports," Agarwal had said in the letter to Moily. T he government usually re-auctions relinquished areas to avoid any controversy. However, of f icials said, the government's objective of enhancing oil and gas output would be better served by the economical option of retaining the old contractor rather than engaging a new one, who would have to start exploration f rom scratch without adequate understanding of the geology. Of f icials in the oil ministry said the move would require the Cabinet's approval because it would mean deviation f rom the contractual provision of the signed contract. "T he Cabinet may relax any contractual term provided it will not adversely af f ect the government's f inancial interest," an of f icial said.