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Rajasthan fields: ONGC board approves revised investment plan

PHOTO: Special Arrangement

Oil rig at work in Barmer field in Rajasthan. —

NEW DELHI: The board of Oil and Natural Gas Corporation (ONGC) on Saturday approved the revised cost estimates for developing the most prolific on-land oilfield in Rajasthan and agreed to invest around $350 million more in the fields operated by Cairn India. The approval ends the uncertainty surrounding the development and the fields will be put to production anytime now.

ONGC, which holds 30 per cent interest in the fields, had earlier withheld approval to Cairn’s revised field development plan as the State-run firm’s liability to pay royalty on the entire crude oil production, although it was only a 30 per cent shareholder, had turned the project economically unviable for it.

The board at its meeting approved the rise in cost of developing Mangala field in the Rajasthan block to $2.396 billion from $1.241 billion. Besides, the cost of smaller adjoining fields would also rise from $261 million to $275 million, a top company official said. ONGC will bear 30 per cent of this cost.

The official, however, said that ONGC would continue to pursue with the government the reimbursement of the royalty it would pay on behalf of Cairn.

There will be no change in the development cost of Bhagyam field, the second largest oilfield in the Rajasthan block, at $471 million.

Also the cost of pipeline transporting the crude from Barmer district in Rajasthan to Gujarat would remain unchanged at $941 million.

ONGC’s total exposure in the project will rise from $ 874.2 million to $ 1.22 billion, he said.

The decision followed Petroleum Ministry pushing ONGC top management to approve the revised cost despite the project offering negative returns on investment. ONGC had previously approved its 30 per cent share of investment at the original capital expenditure of $ 1.5 billion and operating expenditure of $ 1.43 billion for Mangala and adjoining smaller fields. — PTI

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