Cabinet clears extension of pre-NELP blocks
Move to boost Cairn India, others; $5,430-mn investment likely in these blocks
The Union Cabinet on Wednesday approved a policy to grant an extension to production-sharing contracts for pre-NELP (New Exploration Licensing Policy) exploratory oil and gas blocks, giving a major boost to Cairn India and other major producers. The move is likely to attract an additional investment of about $5,430 million in these blocks.
The Union Cabinet on Wednesday approved a policy to grant extension to the production-sharing contracts (PSCs) for preNelp (new exploration licensing policy) exploratory blocks, giving a major boost to Cairn India and other major producers.
The move is likely to attract an additional investment of more than $5,430 million in these blocks. Interestingly, the government’s share of profit during the extended period of the contracts would be 10 per cent higher for these fields, thus bringing additional revenues to government.
The Barmer block in Rajasthan has Cairn India and state-run Oil and Natural Gas Corporation (ONGC) as its partners and the companies were batting for an extension of PSC beyond 2020. The block, also known as Rajasthan block, includes the Mangala, Bhagyam, Aishwariya, and Raageshwari oil and gas fields. It is the biggest onshore oil-producing project in India, producing about 166,000 barrels of oil equivalent per day, accounting for 27 per cent of the country’s overall oil production.
This policy will enable the contractors to extract not only the remaining reserves but also extract additional reserves by implementing new technologies. In certain fields, additional recovery of hydrocarbons can be obtained through enhanced oil recovery and improved oil recovery (EOR/IOR) projects and as such the production would extend beyond the current duration of PSC. “In 2016-17 (up to February 2017), the production from these oil and gas blocks, allotted in pre-Nelp regime, stood at 55 million barrels of oil and 965 million standard cubic metres (MSCM) of natural gas. The recoverable reserve from these blocks is estimated to be more than 426 million barrels of oil equivalent. During the extension period, contractors are expected to make an additional investment of more than $5,430 million,” the petroleum ministry said.