It could be a crucial Friday for Cairn India, as it faces the management committee of the Rajasthan oilfields.
The committee that oversees the operations of the block is expected to meet on Friday and consider further exploration plan in the oilfields. This will help scale up production from the current 175,000 barrels of oil per day (bpd) to 300,000 bpd .
This increased output includes more exploration activity in the producing Bhagyam fields in the block. The company is looking at taking Bhagyam output from the current 22,000 bpd to 40,000 bpd.
The committee comprises Directorate-General of Hydrocarbons and Petroleum Ministry representatives, and nominees of the contractors (Cairn India and ONGC).
This meeting is significant as it follows the recent announcement by the Petroleum Minister M. Veerappa Moily that the Government has decided to allow exploration in mining lease areas, which earlier was restricted.
Exploration companies such as Cairn and Reliance Industries have been pursuing the Petroleum Ministry to allow exploration activity within an area that has been delineated after discoveries of hydrocarbons for production. Petroleum Ministry had said that allowing this went beyond what has been prescribed in the production sharing contract.
However, after due consultations with Law Ministry, it took a policy decision to allow activity in these areas, an official source said.
High resource base
Cairn has been saying that its studies and assessments show potentially higher resource base in Rajasthan in 3,111 sq. km., which has been delineated by the company from the original 11,000 sq. km. Simply put, in this 3,111 sq. km., Cairn was not allowed to undertake exploratory work, till the recent approval came .
Sources said, though the announcement has come regarding the Ministry intent to allow exploration in such areas, “no official communication has been received” as yet.
Rajasthan block is a pre-licensing round PSC. Cairn says both PSC and Mining Lease for the block have enabling provisions that allow carrying out exploration work in the area. The total resource base in Rajasthan now provides a basin potential to produce 300,000 bpd.
Once the management committee gives its nod to the exploration programme accordingly, investments will be worked out, an official said.
Last July, Cairn had sent a proposal to the Ministry for continuing exploration operations in RJ-ON-90/1. The company said it had undertaken extensive geo-technical evaluation work to assess the overall exploration potential of the block.
Till date, 25 discoveries have already been made in the block, and six discoveries have been developed or are being developed, according to the approved field development plans across three development areas — Mangala, Bhagyam, Aishwarya, Saraswati, Raageshwari Oil and Raageshwari Deep Gas.
Field development plans have also been submitted for another four discoveries and these are at various stages of approval process (Shakti, Kameshwari West-2, Kameshwari West-3 and Kameshwari West-6).
Around 12 discoveries still need to be appraised, and together with the prospective resources, these are being considered for the proposed exploration and appraisal drilling campaign.