Cairn India is to be allowed to further explore Rajasthan oilfields, a decision that could raise the block’s output by over 70 per cent. It is said that the Union Oil Ministry has decided to this extent.
The decision will also intensify exploration activities in other producing fields operated by ONGC, GSPC and Reliance Industries, government officials said.
Cairn, which produces 175,000 barrels of oil every day from oilfields in Rajasthan, has been unable to raise its output because of an earlier interpretation of the production-sharing contract (PSC) by the oil ministry that limited exploration activities to the first seven years after a contract is awarded.
After examining Cairn’s proposal afresh – the proposal has been pending with the government for almost 18 months – Union Oil Minister Veerappa Moily came to the conclusion that the PSC does not prohibit exploration in producing fields, officials concerned said.
A source told a leading business newspaper that the block is leased to Cairn for 25 years, which is extendable. Restricting exploration in such blocks would adversely affect country’s energy security because potential oil and gas resources would remain idle till the expiry of the lease period and fresh bids are invited.
Oil ministry to allow Cairn India to further explore Rajasthan oilfields.
While taking the policy decision allowing further exploration, the Ministry has also addressed concerns of the CAG that allowing more exploration activities would raise expenditure and proportionately reduce government’s share in profit, the official said.
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