Facilities at the Rajasthan block. Image courtesy of Carin India.

India’s state owned Oil and Natural Gas Corporation (OGNC) agreed last week to extend Cairn India’s license for the prolific Rajasthan block past the company’s initial 2020 deadline.

OGNC’s board extended the license on January 21 without imposing any new contractual conditions on UK-based Carin, the Hindu Times said.

The exact length of the extension has not been disclosed.

Sources close to the deal told the India’s Economic Times that the production sharing agreement for the block provides for a five year extension for a producing oil field and a 10 year extension for a gas prospect.

The block currently produces about 181,000 barrels of oil per day.

The agreement also calls for ONGC to become the owner of the block’s facilities once the cost of the facilities have been fully recovered.

The matter will now go to a management committee panel composed of representatives from OGNC, Carin and India’s Directorate General of Hydrocarbons (DGH).

If the extension wins a green light from the panel the deal will go to the government for final approval.

Carin holds a 70 percent operating stake in Rajasthan Block RJ-ON-90/2 and ONGC holds a 30 percent stake.

ONGC pays royalties to the government for both its own share of production as well as Carin’s although the payments are eventually cost recovered.

Analysts had excepted ONGC to propose changes to the royalty agreement before approving a license extension.


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