RIL, Cairn get approval for exploring in producing fields

Last Updated: Fri, Jan 04, 2013 15:30 hrs

New Delhi, Jan 4 (IANS) The government has allowed explorers to increase output from within their operational oil and gas fields, Petroleum Minister M. Veerappa Moily said Friday.

"We have cleared the exploration plan of Cairn and ONGC from 175,000 bpd (barrels per day) to 300,000 bpd. This will add 15 percent to the domestic production," Moily told a seminar organised by Assocham on oil and gas exploration.

"The government has decided to allow exploration in mining lease areas. It should open up sufficient investment and it will help in reducing the imports," he added.

Cairn India has been allowed to increase its output from Rajasthan oilfields up to 300,000 bpd. The Barmer block in Rajasthan is now producing 175,000 bpd.

Cairn India has 70 percent participating interest in the Rajasthan block, while its joint venture partner ONGC has the remainder.

The potential resource for the Rajasthan block is now estimated at 7.3 billion barrel of oil equivalent (boe) gross in-place.

According to Cairn India, the Rajasthan recoverable risked prospective resource has increased from 250 million boe gross to 530 million boe gross primarily due to generation of additional leads and prospects.

Firms like Reliance Industries (RIL), which operates the KG-D6 blocks in offshore Andhra Pradesh, and Cairn have argued that exploration, being a continuous process, is allowed under their mining lease for producing gas.

Oil ministry sources said that it had written this week to the Directorate General of Hydrocarbons (DGH) permitting companies to drill exploration wells within an existing field on the condition that such exploration costs' recovery would only be allowed in case of commercially-exploitable discoveries.

The DGH has taken the view that the government's share of profits, which is triggered when an explorer recovers all his costs, would be adversely affected if new costs were to be added.

RIL has proposed an exploration well in the declining D1 and D3 gas fields in the KG-D6 blocks to study reservoir characteristics.

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