ONGC backs Cairn proposal

New Delhi, June 18: Oil and Natural Gas Corporation Ltd (ONGC) has asked the government to extend the tenure of its partner Cairn India's prolific Rajasthan oil block by 10 years without any change in terms and conditions.

Cairn has a significant discovery in the Raageshwari field in the Rajasthan block and wants the Centre to extend the term by 10 years beyond the contractual deadline of 2020. Such an extension needs the approval of the state-run exploration company.

ONGC has now backed Cairn's proposal. Cairn holds a 30 per cent interest in the block.

The PSU has written to the oil ministry saying the licence term should be extended on the existing terms and conditions, a top ministry official said.

The official said the merger of Cairn India with Vedanta and the extension of the exploration contract were two separate issues.

Unlike in 2011, when ONGC had given conditional approval to Cairn's acquisition by Vedanta Group to resolve the royalty dispute, the PSU has not set any precondition this time.

After ONGC's approval, the ministry has now sought a view from the Directorate General of Hydrocarbons, the official said.

Following the expiry of Cairn's contractual term to explore and produce oil and gas from RJ-ON-90/2, the area will return to block licensee ONGC.

Cairn had formally written to ONGC on the issue in July 2014.

ONGC had previously told the ministry that the production-sharing contract (PSC) could be extended if all parties agreed on mutually agreeable terms.

According to the official, the PSC states that the term can be extended for five years if there is oil to be produced and by 10 years if it is a gas-bearing block.