Cairn India moves PM-led cabinet committee on investment to expedite investment

NEW DELHI: Cairn India, the operator of the country’s biggest onland oilfield, has approached the prime minister-led cabinet committee on investment (CCI) to resolve regulatory hurdles that have blocked investments of $2.4 billion and sought its help in reimbursing about $1 billion it spent to develop the block.


The government has recently set up a special cell in the cabinet secretariat to assist investors facing regulatory delays. The CCI is directly monitoring progress of more than two dozens oil and gas projects worth over Rs 103,700 crore. Most of these projects are implemented by state-run companies, government officials said.

The cell acts as an institutional mechanism to pro-actively track stalled public and private projects, so that they are commissioned on time, officials said.

Cairn India approached the cell last month highlighting 10 specific issues that required the government’s urgent attention, an oil ministry official said.

The private energy explorer is seeking approvals for raising output from the Rajasthan oilfields to 300,000 barrels per day from current out of 180,000 bpd and wants permission to find more oil and gas in unexplored areas of the block.

“Fast-tracking approval process would enable maximising the block’s significant production potential and thereby reduce our nation’s dependence on imported oil. Over the next three fiscal years, Cairn India is willing to invest more than Rs 13,000 crore ($2.4 billion) to maximise block’s production potential,” a Cairn India spokesman said. Cairn India has said it is unable to recover about $1 billion of its field-development costs because of some “minor procedural issues”.

“All stakeholders, including government of India and ONGC are realizing their share of revenues from the expenditure. It is only fair that the costs which are incurred to develop this `national asset’ be allowed for cost recovery as per the provisions of production sharing contract,” Cairn appealed to the special cell. Oil and gas contracts allows explorers to first recover their entire development costs from the sale of hydrocarbons before sharing profits with the government. Cairn has also approached CCI separately for expeditious regulatory clearances to its Rs 2,862 crore Salaya-Bhogat pipeline project. The pipeline is crucial to export the crude to coastal refineries in India.

Petronet LNG is the other private energy firm that approached CCI for its Rs 5,000 crore Gangavaram liquefied natural gas terminal in Andhra Pradesh.