ONGC nod for Cairn plan - Business Standard

The board of Oil and Natural Gas Corporation (ONGC) today approved the revised investment plan submitted by Cairn India for its Rajashtan oilfields which are owned 30 per cent by the public sector unit. This has ended the uncertainty over ONGC’s participation in the venture, which is one of the largest onshore crude oil wells discovered in the country in recent years.

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Cairn had revised the total cost for developing the three oil fields (Mangala, Bhagyam and Aishwariya) in Rajasthan to $3.60-3.80 billion (Rs 16,902-17,840 crore), including $940 million (Rs 4,413 crore) for a pipeline to evacuate the crude oil to coastal Gujarat, from $2.93 billion (Rs 13,756 crore) earlier. Cairn is the operator in the three oilfields with a 70 per cent stake, while the rest is owned by ONGC as a licensee. Consequently, Cairn will have to fund 70 per cent of this investment and ONGC, 30 per cent. ONGC had earlier withheld approval to Cairn’s revised field development plan as the liability to pay royalty on the entire crude oil production, although it is only a 30 per cent shareholder, rests with it, which has turned the project economically unviable for it. In spite of today’s approval, said an ONGC official, the company will continue to pursue with the central government the reimbursement of the royalty it will pay on behalf of Cairn.

Full Story: ONGC nod for Cairn plan - Business Standard