Essar group strikes more oil in Gujarat

Essar Oil, part of the diversified Essar group, has found additional oil in the onshore Mehsana oil field in Gujarat. The company is in the process of doubling its production to 800 oil barrels a day from the current 400 barrels a day, from a part of the field called prospect-B.

The new find will increase production beyond the planned 800 barrels per day.

Currently India produces about 8 lakh barrels of crude oil a day. The consumption is around 27 lakh barrels a day, which means almost 70 per cent of the requirement is imported. The government estimates the imports to go up to around 85 per cent in the next five years, if production remains at the current levels.

Essar has found oil in an area called prospect-F in the oil field. "We are still assessing the commercial viability of the new find," a senior Essar Oil official said, adding that the reserves in the new find would only be known after the assessment was completed.

"The finding is under appraisal. The reserves will be determined only after auditing is carried out in the block," the official said.

The Directorate General of Hydrocarbons (DGH), the regulator for the country's exploration and production sector, is likely to be informed soon.

The oil find comes at a time when Reliance Industries has found a significant amount of gas in the Krishna-Godavari and Cauvery basins in the east coast and the Cambay basin in the west coast. ONGC and GSPC have also announced gas finds in the east coast.

Cairn India is also set to start producing at a peak rate of 150,000 barrels of oil per day from its Rajasthan fields.

Essar has also found oil in another part of the block known as prospect-A. This find is estimated to have reserves of up to 2-3 million barrels of oil. The producing prospect-B has reserves of around 9 million barrels of oil.

Oil in the Mehsana block is very heavy and does not flow to the surface easily. "We have managed to get the oil to flow to the surface using the heater treater technology. We are waiting to declare the commercial viability of the prospect-A find," the official said.

As per the norms, an oil find can be established only when the oil flows to the surface.

The prospect-A discovery has been informed to the DGH.

The Mehsana field was awarded to the government-owned Oil and Natural Gas Corporation (ONGC) under the third round of the New Exploration and Licensing Policy. Essar is the operator with 70 per cent stake, while ONGC holds 30 per cent stake.

The prospect-B currently produces around 400 barrels per day of oil which is being sold to Indian Oil Corporation's Koyali refinery. The company is planning to drill two more wells in the area, which it says would double production to 800 barrels a day. Around six wells have been drilled so far.