New Delhi : As a shot in the arm for Cairn India, its partner Oil and Natural Gas Corp has asked the government to extend the tenure of prolific Rajasthan oil block by 10 years without any changes in terms and conditions.
Cairn, which holds 30% interest in the Rajasthan block, wants to retain the Rajasthan block beyond the contractual deadline of 2020. And for such an extension the nod of the state-owned firm, which is a licence of the block holding 30% interest, was necessary.
ONGC has agreed to the Cairn proposal and written to the Oil Ministry saying the licence term should be extended by 10 years on the existing terms and conditions, a top official told PTI.
Unlike in 2011, when it had given conditional approval for Cairn being acquired by Vedanta Group to resolve the royalty dispute, ONGC has not put any pre-condition this time.
After ONGC nod, the ministry has now sought a view from the upstream regulator, the DGH for extension of the license term, he said.
Cairn’s contractual term for exploring and producing oil and gas from the Rajasthan Block RJ-ON-90/2 expires in 2020 and the area is to return to the block licensee, ONGC.
ONGC had previously told the ministry that the production sharing contract (PSC) can be extended beyond 2020 if all parties to the contract agree on mutually agreeable terms.
The official said the PSC states that the contractual term can be extended for 5 years if there remains oil to be produced and by 10 years if it is a gas bearing block. ONGC is the licensee of the block, which produces about 160,000 barrels per day of oil.
Cairn says it has a significant Raageshwari gas discovery in the block and so the term should be extended by 10 years, a contention that the state-owned ONGC has now backed.
