People close to the development told Business Standard that both the extensions were sought last month. The Delhi High Court had last week granted the company an extension for the Barmer block on same contract conditions, but Petroleum Minister Dharmendra Pradhan
said the government would stick to its extension policy and appeal against the order.
Confirming the applications, Sudhir Mathur, chief executive officer, Vedanta
Cairn, said, “We have applied for PSC (production-sharing contract) extension in two of our blocks – Ravva and Rajasthan (Barmer). The contracts for the two blocks are different.”
While the Rajasthan PSC allows an extension on the same terms, there is “no such explicit provision” in the Ravva PSC. “Hence in case of Ravva, we have applied for an extension under the government’s new policy. However, in case of Rajasthan, our view is that the existing contract has to be honoured,” he added.
An analyst said the requirement of additional profit share by the government under the extension policy, which came out in April 2017, could make the production of oil in some cases unviable for the company. “The high court order is a landmark judgement in that it reposes faith in contracts. The government should not make a policy today for applying to contracts that were signed 20 years back,” he said.
In its petition, Vedanta
had said the estimated recoverable reserves in the Rajasthan block was approximately 1.2 billion barrels of oil, and that 466 million BOE can be recovered if the tenure of the existing PSC was extended till 2030.
The current PSC for Barmer expires in May 2020, while that of Ravva block expires in December 2019.
1. The Ravva block is in Krishna Godavari Basin.
2. The production-sharing contract for the field was signed in 1994 and will expire in May 2019.
3. Cairn holds 22.5 per cent stake in the block.
4. It produces approximately 18,600 boepd from the area.
1. The Barmer block is in Rajastan and includes the Mangala, Bhagyam, Aishwariya and Raageshwari oil and gas fields.
2. The block’s PSC is up for extension in 2020.
3. It is the biggest onshore oil-producing project in India, producing about 166,000 barrels of oil equivalent per day
4. Barmer accounts for 27% of the country’s overall oil production.