Cairn India gets DGH approval for gas production

Cairn India has got approval from Directorate General of Hydrocarbons to commercially produce gas in its Raageshwari Deep Gas field in Barmer, Rajasthan. The approval makes it eligible to seek an extension after the contract for the block expires in 2020.

Under the production sharing contract (PSC), a block is considered for a five-year extension if it produces oil, and for 10 years if it produces natural gas. An operator of a block requires the approval of a managing committee comprising of the DGH and the operator to start commercial production.

The Barmer oil block accounts for nearly a fourth of India’s local oil production. But a gas discovery in the Raageshwari field in the RJ-ON-901 Barmer block will give government the flexibility to consider it a gas block and thus offer a 10-year extension, people familiar with the development said.

Although Cairn did not give more details on the approval, it had said in a statement in January that the “management committee approval on Raageshwari Deep Gas field development plan of 100 mmscfd is in advanced stages and work on execution planning and contracting is underway”. The Raageshwari field is estimated to hold 1-3 tcf of gas. At present, the Rajasthan block of Cairn produces 10 mmscfd of gas. “With the managing committee’s approval, Cairn India has now attained the eligibility to seek a 10-year extension,” said one of the persons cited earlier. “Now it’s for the Cairn and ONGC to submit a joint proposal and finalise terms of extension with DGH.”

Source: Economic Times