Nov. 21: Cairn India has been forced to cap oil production from its Rajasthan fields as the government is delaying approval for plans to raise output by 20 per cent ostensibly because of its standoff with the company’s majority shareholder.
Cairn India produces 125,000 barrels of crude oil per day (6.25 million tonnes a year) from Mangala oilfield, the largest among the 15 discoveries in the Rajasthan block RJ-ON-90/1.
The company nearly four months ago had told the oil ministry and sector regulator — directorate general of hydrocarbons (DGH) that the output from the Mangala field can be raised to 150,000 bpd (7.5 million tonnes) without any new investment from the existing facilities, sources said.
But the plan has not been approved either by state-owned Oil and Natural Gas Corp (ONGC), which holds 30 per cent interest in the Thar dessert fields, or the DGH, sources said, and added the oil ministry too is sitting on this proposal.
India meets 73 per cent of its oil needs through imports. Hence not producing 1.25 million tonnes of crude oil does not augur well for the country’s energy security, experts said.
Sources said Cairn India has completed drilling 74 wells but is producing oil from only 48 wells. The facilities at the Mangala field can sustain output of 150,000 bpd output.
Industry watchers said Cairn Energy has had differences with the oil ministry on the requirement of prior government consent and the standoff is costing the nation dear with regard to precious oil. The oil ministry says it will not consider approving Cairn Energy’s proposal to sell majority stake in its Indian arm to Vedanta Resources unless the firm sheds its selective approach and makes a formal application for the transfer of control in all its 10 properties.
The UK-based firm has sought permission for only seven exploration acerages, while it has kept three producing properties including Rajasthan fields out of the application.