Cairn Oil & Gas plans to invest $ 5 billion by 2025-26 on the expansion of operations, of which $3 billion would be towards its Rajasthan block, deputy chief executive officer Prachur Sah told Moneycontrol on October 28.
The oil and gas exploration arm of billionaire Anil Agrawal-led Vedanta Ltd had a day earlier announced that the petroleum and natural gas ministry had extended to May 2030 the production-sharing contract (PSC) for its Rajasthan block.
“Majority of our ($ 5 billion) investment goes into this block because it has the largest potential. Of course, we are investing in our existing offshore blocks and the new OALP (open acerage licensing policy) blocks as well,” Sah said in an exclusive interview to Moneycontrol on October 28.
The RJ-ON-90/1 block in Rajasthan’s Barmer is a joint venture in which Cairn Oil and Gas, formerly Cairn India, owns a 70 percent share. The remaining 30 percent is owned by state-run ONGC Ltd.
The initial licence to explore and produce oil and gas from the block expired May 14, 2020.
The Rajasthan block is India’s largest onshore producing block, contributing over a quarter to the country’s domestic crude production.
Vedanta had been seeking an extension for the PSC, which would have offered the company clarity to its investment plans.
The company moved court after it did not receive a favourable response from the Centre. The government chose to give extensions for smaller periods after the initial pact expired in May 2020.
Sah said the extension delays were “water under the bridge”.
“In terms of investment, even though for the last two years we did not have the extension and we were working on ad hoc extensions, we continued to invest. But now we are looking at least $3 billion for the next two-three years across different programmes,” he said.
The block, which has had 38 discoveries so far, has an exploration potential resource of 1.3 billion barrels of oil equivalent (bboe). The company has set a recovery target of over 50 percent.
In an interview to Moneycontrol on April 22, Agrawal had said oil and gas exploration was among the lowest in India and the government needed to spur private sector participation and capex to ensure energy security.
“If we really want energy security in this country, we need at least 20-30 companies to come in. I have always said Barmer can be another Houston, there is so much potential.
“India has enough resources available. It only needs simple policies, which our Prime Minister also wants. Let people make money; making money should not be a sin,” he said.
At 1.49 pm, Vedanta shares were trading at Rs 283.65 on the National Stock Exchange, down 1.5 percent from the previous day.
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