Govt may extend Cairn's production sharing contract

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26 Aug, 2025 12:21

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Government is likely to extend by 10 years the licence of Vedanta group firm Cairn India to explore and produce oil from the Barmer block in Rajasthan provided the firm agrees to pay more profit share to the exchequer. "Cairn has a production sharing contract which expires in 2020. Government of India has offered an extension of the production sharing contract to Cairn for 10 years on condition that they increase their share of revenue to the Government of India," Rajasthan Chief Secretary C S Rajan said here.

"This time around this is a much less risky proposition because now reserves of oil has already been located. Lower risk investment this time around, they should be willing to part with the higher share of profit to the Government of India," he said on the sidelines of the Resurgent Rajasthan Partnership Summit here. At present, the government's profit petroleum ranges from 25 percent to 60 percent.

In case of Cairn's Rajasthan block, it is 50 percent. Once that happens, the production sharing contract will be extended by 10 years till 2030, he said, adding, this will bring in billions of dollars of investments to the state. Recently, a Committee headed by the Directorate General of Hydrocarbons (DGH) on policy for grant of extension to the Production Sharing Contracts (PSC) for small, medium-sized and discovered fields that were awarded to private firms in 1990s, has recommended a uniform 10-year extension but on revised terms and conditions.

The panel has recommended that contracts may be extended for 10 years for both oil and gas fields or the balance economic life of the field, whichever is earlier, but with revised terms and conditions. On the investment commitment that the state received during the two-day summit, Rajan said about 60 percent proposals have come for setting up solar energy plant. Out of the total Rs 3.21 lakh crore investment proposals, Rs 1.90 lakh crore is in solar energy sector.