ONGC concurs to Cairn being given Rajasthan block expansion

Cairn's contractual term for exploring as well as manufacturing oil and gas from Rajasthan Block RJ-ON-90/2 terminated in 2020

Navi Mumbai, Maharashtra, January 30, 2015 /India PRwire/ -- In a surprise turn of events, nationalized Oil and Natural Gas Corporation (ONGC) has concurred to its colleague, Cairn India, retaining the productive Rajasthan oil block ahead of the contractual deadline of 2020, exclusive of any condition.

In a conference on January 21, the corporation board recognized that the signed agreements provided for expansion of the block license merely on mutually satisfying terms by all parties - the two collaborators, ONGC as well as Cairn, and the government.

Unlike 2011, when it had provisional approval for Cairn being obtained by Vedanta Group to determine the royalty argument, ONGC had not put any prerequisite this instant, sources with direct knowledge of the expansion said.

The board only told the license could be expanded on equally agreeable terms as well as asked the administration to decide on the issue.

After interior agreement by ONGC, the issue will now come for conversation at the management committee (MC), a board headed by the director general of hydrocarbons and involving the two co-workers. Just the once the MC clears the expansion tender, it will go to the administration.

Cairn's contractual term for exploring as well as manufacturing oil and gas from the Rajasthan Block RJ-ON-90/2 terminates in 2020 and the region is to return to the block licensee, ONGC.

The Anil Agarwal group corporation, which desires the term of the block expanded by as a minimum 10 Years, had in July 2014 officially written to ONGC on the matter, sources told.

ONGC, which at present holds a 30 per cent bet in the block, had formerly said the oil bureau that the production-sharing contract (PSC) could be expanded ahead of 2020, if all colleagues to the agreement agreed on communally agreeable terms.

The nationalized firm was to make a decision on terms on which it could concur on permitting Cairn to continue to operate the fields.

ONGC as a licensee of the mass, which makes approximately 181,000 barrels of oil for each day, pays royalty to the administration on not presently its 30 per cent stake but on Cairn's 70 per cent interest.

Though the royalty is later price improved (in accordance with the 2011 concord amid Cairn as well as ONGC), the corporation faces cash flow matters on account of having to pay in advance. For agreeing to Cairn's tender, there was an opinion with ONGC that a situation be put that payment be shared by the colleagues corresponding to their shareholding. In addition, it must look for a higher bet of 50 per cent.

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