Cairn India official said the delay in renewal could push the date to the onset of monsoon
New Delhi: Cairn India's plan of drilling new wells for oil and gas in its Ravva block in the Krishna-Godavari basin is likely to get delayed.
This is not good news for the company, also energy-starved India.
Highly placed sources told BTVI the delay happened because Cairn India, a subsidiary of Vedanta Resources, is yet to sign its renewal of Production Sharing Contract (PSC) with the government. The project is a joint venture between Cairn India, ONGC and Videocon. The PSC extends till 2019 but a renewal is in order. Cairn India plans to revive production output from the ageing block by drilling 2 new wells starting this May. The renewed contract will last for another ten years till 2029. Cairn applied for renewal of its PSC last year but the government is yet to respond. "Technical clarifications are done with, we are now waiting for the PSC renewal from the government", a top Cairn India official said.
There are other worries as well. Cairn India official said the delay in renewal could push the date to the onset of monsoon. Even if the PSC renewal comes through this month, the monsoon would invariably hamper the drilling process. "Moving a rig during monsoon becomes difficult as the slopes get slippery", said the official.
Output volumes from Ravva, discovered in 1987, has been declining after reaching its peak production level averaging 30,000 barrels per day in 2015. Cairn used an innovative Time Lapse (4D) seismic technology to arrest the production decline. Eventually, the block started yielding good returns. Over the years, the block has produced over 269 million barrels of crude and over 337 billion cubic feet of gas. Interestingly, the block has had nearly 50 percent recovery factor against the average 25-30 percent recovery factor across oil and gas fields in India.
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