Pradhan rejects Cairn plea on block restoration

The government is not considering restoring to Cairn India nearly 8,000 square km the firm had surrendered in the prolific Rajasthan oil block, Oil Minister Dharmendra Pradhan said today.
Cairn's Barmer basin Rajasthan block, RJ-ON-90/1, originally covered an area of 11,108 sq km. According to the contractual requirement, Cairn relinquished or gave up areas where it had not found any oil or gas and retained only 3,111 sq km where it had made more than two dozen oil and gas discoveries.
The company had in April 2013 written to the government seeking return of all of the 7,997 sq km it had given up, saying the area holds potential and needs to be explored.

Pradhan replied "no" in a written reply to a question in the Rajya Sabha that sought to know if the "government is reconsidering the request of Cairn India Ltd to return areas in Barmer oil and gas block".
He also replied "no" when asked if "the government has during the last three years allowed Cairn India Ltd a special dispensation violating Production Sharing Contracts (PSCs)".
Officials said the upstream regulator, the Directorate General of Hydrocarbons (DGH), had opined that return on nomination basis of any area previously relinquished by Cairn was not legally tenable.

In all PSCs, in force in the country, there are no provisions for restoration of original contract area after the relinquishment and expiry of exploration period, DGH had told the ministry.

Out of the relinquished area, 5 coal-bed methane (CBM) blocks have been carved out and awarded by the government, of which 2 blocks viz BS4-CBM-2005/III and BS5-CBM-2005/III are currently under operation.
Officials said all the relinquished areas are offered in subsequent New Exploration Licensing Policy (NELP) bidding rounds and therefore, no hydrocarbon will remain unexplored.
Granting of relinquished area to earlier contractor on nomination basis was not as per NELP, DGH had told the ministry.
Cairn needs to participate in future NELP or Open Acreage Licensing Policy (OPAL) bidding with highest offer for award of additional acreages in Rajasthan, the officials said.

Originally, the Rajasthan block, RJ-ON-90/1, was awarded to Royal Dutch Shell in pre-NELP round and a PSC was signed on May 15, 1995. Cairn subsequently bought out Shell in the block.
The PSC of the block stipulated three phases of exploration totaling 7 years, which ended on May 14, 2002.
Subsequently, three extensions were granted to Cairn to explore/appraise the area even after the expiry of original exploration phase.
As per contractual requirement, Cairn relinquished 7,997 sq km and retained only parts where it had made oil or gas discoveries.