Cairn, ONGC slip on Rajasthan blocks deadline

NEW DELHI: Cairn Energy of UK and ONGC, partners in the oil blocks in Rajasthan, may find themselves in a soup not meeting deadlines under the production sharing contract (PSC). The directorate-general of hydrocarbons (DGH), regulator for the upstream sector, has written to the developers of Rajasthan fields Mangala, Aishwarya, Saraswati and Raageshwari that strong action would be taken against Cairn Energy and its consortium partner if it fails to submit its development plan approved by the management and appraisal committees by December 31.

Speaking to ET, V K Sibal, DGH, said: “We have written to them as the approved development plan is still not in place. They were required to give it by May and it’s long overdue. We hope to get a response by them soon. ” DGH said Cairn’s inability to meet the December 31 deadline would force the regulator to take stringent steps.

Article 9.6 of the PSC stipulates that the contractor should submit a comprehensive development plan within 200 days of the declaration of a discovery of crude oil as a ‘commercial discovery’. As the management committee (MC) approved the commercial viability of the four fields on October 15, ’04, the development plan should ideally have been put before the management committee by May 2, ’05.

“It’s a plan involving investments of about $1.3bn and we need to have a proper approval in place. It is necessary for players in the upstream sector to maintain certain guidelines on discoveries, announcements and approvals of development plans,” Mr Sibal said.Cairn Energy and ONGC have planned to develop a refinery near the oil fields to use some part of the crude produced in these fields.