The 10-year extension for Cairn Oil & Gas-operated Rajasthan block in Barmer has boosted reserves by four folds, according to a company presentation.
“The extension will add reserves and production in the short term. We have planned $4-billion investments, of which $2.5 billion has been contracted,” Sudhir Mathur, CEO, Cairn Oil & Gas, Vedanta Limited told BusinessLine .
The Centre had granted its approval for a 10-year extension of the Rajasthan’s production-sharing contract (PSC) on Monday. The tenure was due to expire on May 14, 2020. It has been extended for an additional period of 10 years with effect from May 15, 2020, the statement said.
A company presentation to analysts noted that the PSC extension has resulted in a four-fold jump in Rajasthan reserves from 150 million barrels of oil equivalent (mboe) to 600 mboe.
The presentation also said that enhanced oil recovery techniques shall take Mangala, Bhagyam, Aishwariya (MBA) fields’ ultimate recovery factor to around 50 per cent.
The growth in capital expenditure adds over 350 mboe at a low cost of development, including MBA Alkaline Surfactant Polymer (ASP), Polymer Recovery, tight oil and tight gas, the presentation added. The Centre had approved a policy on PSC extension in April, under which a company can get an extension beyond the initial 25 years only if the government’s share of profit petroleum is increased by 10 per cent.
Vedanta has challenged this policy and the Delhi High Court ruled in favour of the company, asking the Centre to extend the PSC till 2030 under existing terms. This verdict was challenged by the Centre and subsequently put on hold by the Division Bench of the high court.