ONGC board may take up Cairn investment

NEW DELHI: The Board of Oil and Natural Gas Corporation (ONGC) may consider on Saturday if ONGC will invest more in Cairn India's Rajasthan oilfield despite the project offering negative returns on investment.

"The Petroleum Ministry has been pushing us to clear our share of investment in the Rajasthan fields according to the revised cost estimates made by operator Cairn," a senior company official said.

The ONGC Board had at the last meeting deferred a decision on investing according to Cairn's revised field development plan as the state-run firm's liability to pay royalty on the entire crude oil production despite it having just a 30 per cent share had turned the project economically unviable for it.

"There are independent directors who are asking pertinent questions," the official said.

ONGC had previously approved its 30 per cent share of investment at the original capital expenditure of USD 1.5 billion and operating expenditure of USD 1.43 billion. But Cairn has revised the capital cost to USD 2.67 billion and operating expenditure to USD 1.52 billion besides $941 million being the cost of a pipeline to transport crude oil.