Cairn India’s prolific Rajasthan oil fields may return to ONGC if the Government and the State-owned firm do not extend the term of the block beyond the stipulated period provided in the contract.
The Rajasthan Production Sharing Contract (PSC) provides for ONGC becoming the owner of all facilities once their cost is recovered from sale of crude oil, sources said.
The cost of Mangala, Bhagyam and Aishwariya oil field facilities in the block as well as the heated pipeline that carries the crude from the field to Gujarat refiners will be recovered much before the current term of PSC ends in 2020.
Sources said ONGC as a licensee of the block pays royalty on not just its 30 per cent stake but also on Cairn’s 70 per cent interest, which is subsequently cost recovered.
The Rajasthan Block RJ-ON-90/2 was awarded as an exploration acreage on terms different from 28 small and medium-sized fields like Panna/Mukta and Tapti and Ravva awarded alongside during 1991 and 1993.
The Oil Ministry in a draft policy has proposed extension of the PSC for these fields by 10 years or the balance economic life of the field, whichever is earlier. Cairn’s Rajasthan block is not included in this policy, they said.