ONGC likely to conduct second feasibility study
As Cairn India began to pump crude oil today from its Mangala oilfield here, there was a flicker of hope for Rajasthan which has for long demanded a refinery at Barmer to process the crude oil.
Chief Minister Ashok Gehlot reiterated the demand in the presence of Prime Minister Manmohan Singh who had come here to inaugurate the country’s largest onshore oilfield. “There has been a demand for a refinery from the state government. The Prime Minister has instructed that this case should be considered. We will give it a serious thought,” Petroleum Minister Murli Deora said in his address.
| BARMER BOUNTY |
| Mangala field discovered in January 2004 |
| More than 140 wells drilled |
| Reserves estimated at 3.7 billion barrels of oil equivalent |
| Recoverable reserves of 1 billion barrels |
| Initial production 30,000 barrels per day; peak will be 1,75,000 bpd |
State-owned Oil and Natural Gas Corporation had a few years back got the mandate to put up a refinery in Rajasthan but dropped the plan after the feasibility study showed that the project was not viable. ONGC Chairman R S Sharma, however, today said his company was in discussion with the state government to explore the economic viability of the refinery. But Cairn India Chairman Bill Gammell said his company was unlikely to make any downstream investment. ONGC is a 30 per cent stakeholder in the Barmer block, while Cairn India is the operator.
Deora said that Cairn India has so far made an investment of Rs 10,000 crore in the project. The total investment in the project would be more than Rs 20,000 crore. The central government is slated to get Rs 46,000 crore over the life of the project, while the state government would get Rs 12,000 crore as royalty revenue for the first five years of the project, he added.
The Mangala Processing Terminal will initially produce 30,000 barrels a day of crude oil, which will be increased by another 100,000 barrels in the first half of 2010. Production could eventually reach a peak of 175,000 barrels a day, when it will account for around 20 per cent of the country’s crude oil production.
“A new chapter begins today in the development of Rajasthan. I can imagine a new and prosperous Rajasthan. The efforts of Cairn in setting up this facility will set a precedent. India now has a suitable climate to attract foreign direct investment and I invite entrepreneurs from all over the world to invest in our country. The government will do everything possible to facilitate such investments,” Prime Minister Singh said in his speech.
On the issue of the applicability of value added tax (VAT) on crude oil production, Chief Minister Gehlot requested the petroleum minister to iron out the issue between the two stakeholders: ONGC and Cairn India. The state government has proposed to levy 4 per cent VAT, while Cairn India has said that the crude oil sale should be considered inter-state trade and accordingly central state tax at 2 per cent should be levied.
