Cairn Oil & Gas Signs 10-Year PSC for Barmer Petroleum Block
Cairn Oil & Gas, Vedanta Ltd.’s oil and gas unit, has extended its Production Sharing Contract (PSC) for its Rajasthan Block (RJ-ON-90/1), after getting approval from the Ministry of Petroleum & Natural Gas (MoPNG). With this extension, Vedanta’s PSC for the Rajasthan block will be valid till 14th May 2030.
Road Set For Vedanta’s $5 Billion Expansion in the Oil & Gas Sector by FY-26
Talking about the company’s production targets, Cairn Oil & Gas Deputy CEO, Mr. Prachur Sah said, “This extension will be a key determinant in our goal of doubling production capacities.” Cairn Oil & Gas eyes achieving a production capacity of 500,000 barrels of oil equivalent per day (500 Kboepd). This will be achieved by a US$ 5 billion investment to be made by FY-26. Mr. Sah said that with this investment, the company also targets contributing 50% of India’s domestic crude oil production.
Rajasthan Block to Witness $3 Billion Investment by FY-26
Speaking to Moneycontrol, Mr. Sah said that about $3 billion of this total amount will be invested in the Barmer block.
He further elaborated that the Rajasthan block requires substantial investment in Enhanced Oil Recovery (EOR) techniques. Mr. Sah added, “The field also carries potential for new explorations. For these opportunities, especially, this contract extension will be significant.”
Therefore, this PSC extension for the Barmer block is crucial for the company’s future Exploration and Production goals.
Rajasthan Block One of Cairn’s Most Prolific Onshore Assets
The Rajasthan block is spread over an area of 3,111 sq.Km in the Barmer district of Rajasthan. This block has 38 discoveries and has produced over 700 million barrels of oil equivalent (mboe) in the last ten years.
In a separate press release dated 10th October 2022, Cairn Oil & Gas stated that the cumulative production from its Mangala oilfield in the Rajasthan block had reached 500 Million barrels. As per Cairn, this oilfield is India’s largest onshore oilfield discovered in the last 20 years.
Mangala is a part of Cairn’s Mangala-Bhagyam-Aishwarya (MBA) oilfields in the Rajasthan block, which together account for about 20% of India’s crude production.
Brief Background of Cairn’s PSC for Rajasthan Block
Cairn Oil & Gas had a PSC for the Rajasthan block that expired on 14th May 2020 after being in force for 25 years.
In a notification dated 7th April 2017, the Government approved Vedanta’s application for a 10-year extension of this PSC under the Pre-NELP (New Exploration Licensing Policy) Extension.
This extension was subject to the condition that the Government’s share in the oil and gas profits from the Barmer blocks be increased by 10%. Further, a settlement of Rs. 5,651 crore was to be paid by Vedanta to the Government for recovering the latter’s costs.
This PSC extension for the Rajasthan block was finally executed on 27th October 2022.
