Agarwal seeks Moily's intervention so Cairn can explore oil
New Delhi: Vedanta Resources Chairman Anil Agarwal has sought intervention of the new Oil Minister M Veerappa Moily to help his group firm Cairn India raise output from the Rajasthan oil fields by allowing further exploration the prolific block.
Cairn India is looking to increase Rajasthan field output from current level of 175,000 barrels per day (bpd) to 300,000 bpd (15 million tons per annum) and had several months back made an application to the Oil Ministry seeking permission to explore within the ring-fenced development area that contains 25 oil and gas finds.
The Ministry, which about a fortnight back saw change of guard when Moily replaced S Jaipal Reddy, had so far not allowed the company to explore for oil even though the contract for the block allowed such an activity.
"The Production Sharing Contract (PSC) provisions permit exploration and Government does not lose any revenue by permitting exploration," Agarwal wrote to Moily on October 30. "The approvals should be granted in a simple manner, without any delay."
Moily, who took over as the Oil Minister on October 29, promised to look into the matter "for an early resolution."
"It is unusual to continue only production without new exploration, as you are kindly aware production and exploration goes hand in hand. East day lost can never be recovered," Agarwal wrote.
Agarwal had on July 6 written to the Prime Minister Manmohan Singh saying "the Rajasthan PSC and the mining lease have enabling provisions that allow carrying on exploration in development area; however, we have been asked to obtain government approval."
"As exploration is continuing in other producing blocks in the country, we request government approval for exploration in Rajasthan to enable us to achieve the full production potential," he had written then.
Agarwal followed up the letter with another one to Economic Affairs Secretary Arvind Mayaram on October 25 saying, 300,000 bpd output "would translate into average annual revenues to the national exchequer of Rs 30,000 crores and reduce our oil import dependency by USD 8.5 billion."
Previously, he had written several letters to the Oil Ministry as well as Prime Minister's Office, Finance Ministry and Planning Commission.
"Our country's flagship asset in Rajasthan alone produces 175,000 bpd and at this level will contribute over Rs 15,000 crores annually to Government of India and Government of Rajasthan," he wrote to Moily on October 30.
Barmer basin in Rajasthan, he said, holds an estimated 7.3 billion barrels of oil and gas in place resource which support production potential of 300,000 bpd.
"However, this potential (of 300,000 bpd output) can be realised only if the joint venture consisting of Cairn-ONGC is actively encouraged to undertake further exploration," Agarwal wrote.
The Prime Minister, he said is also keen to have oil and gas production increased and encourages exploration.
"I request your personal intervention to expedite the required approvals so that we can deploy the resources which are currently idle," Agarwal said adding he looked forward to Moily's leadership in enhancing the domestic exploration and production of crude oil and natural gas.
Cairn has so far made 25 oil and gas discoveries in the Rajasthan block. A 3,111 square kilometre development area was ring-fenced from an exploration area more than three times its size after discoveries were made.
The Directorate General of Hydrocarbons (DGH) had sometime back taken a view that exploration is not permitted within an area that has been delineated after discoveries for production of hydrocarbons.
Cairn says the PSC defines a development area as one that not just includes a discovery or a group of discoveries but also "area of potential petroleum deposits".
The exploration it wants to undertake is additional to the investment it is making in developing MBA fields and 22 other oil and gas finds in the 3,111 sq km area delineated as development area.
Cairn holds 70 percent interest in the Rajasthan block while state-owned Oil and Natural Gas Corp (ONGC) holds the remaining 30 percent.