Companies & Sectors
Cairn India gets MoEF nod to increase production from Barmer field

It would be far more realistic and practical, if contractors like Cairn have an automatic authorisation to increase output by upto 25% more than the "permitted" or "authorised" clearances


It is gratifying to note that the Ministry of Environment and Forests has given its approval to Cairn India to raise its oil output in the Barmer fields in Rajasthan, from its current (about) 200,000 barrels a day to 300,000 barrels. Now Cairn plans to spend some $3 billion on the oil recovery programme and also to double the natural gas output in the State. At the moment, Barmer fields reserves are said to hold 3 trillion cubic feet (tcf) of oil.


The production sharing contract (PSC) for Cairn expires in May 2020 and is renewable by ten years.


The gestation period required for increasing the oil production by 100,000 barrels a day to reach 300,000 barrels would take about two years to achieve. The "in place" reserve of oil identified by the company is about 5.8 billion barrels and by March 2015, this may increase by 1.2 billion barrels to reach 7 billion barrels.


It is reported that Cairn is already working on the new gas plant at Raageshwari Gas Terminal to process 85 mscmd of gas. It may be noted that the Rajasthan Block output is 183,164 barrels of oil equivalent (oil and some gas). It may be recalled that the oil production started in 2009 but could be only commercialised in March 2013.


In so far as Cairn is concerned, between 2011-12 and 2014-15 (so far), there have been 40 discoveries, consisting of 18 oil and 22 gas, on land and offshore. But declaration of commerciality has been reviewed for four discoveries only (by block management).


Although the overall demand for gas has been rising in the country, actual gas production has been 129 million standard cubic metres per day in 2014-15. This was stated by Minister Dharmendra Pradhan in the Parliament recently. He also mentioned under the production sharing contract regime, discoveries made are required to be developed in accordance within the specified time frame. His ministry would be following up this matter regularly with all concerned.


Dharmendra Pradhan reiterated that the Government has "the right to conduct oil and gas block audit" under Section 1.9 of the Accounting Procedure of the Production sharing contract and to audit all fields, both pre-NELP and NELP blocks.


What is important, however, is that an "audit" happens after an "event" is actually over! What we need to do is to ensure that the government has a watch-dog committee of technically qualified personnel to make surprise inspections of the fields from time to time. Also, there is a need to oversee that the mutually agreed regime is in place and that the work is progressing accordingly.


Digressing for a moment, if the past is any criterion, government officials charged, at least in the case of Reliance Industries Ltd, that they (contractor) did not drill sufficient wells to tap gas resources in KG-D6. For example, if "x" number of wells are planned to be drilled to explore gas/oil resources, this watch-dog committee must be on their toes to ensure that this job is actually done. A day lost in not doing the assigned job is lost for ever!


Now, as we can see in the case of Cairn, it will take anything upto two years more before they could increase the oil production to 300,000 barrels a day to have all the needed equipment in place and do all the spade work that is needed to get on with the job. It would be far more realistic and practical, if contractors like Cairn have an automatic authorisation to increase the output upto 25% more than the "permitted" or "authorised" clearances. We do not know how long it took Cairn to get the MOEF clearance to move from 200,000 to 300,000 barrels a day. But we do know now that it would take something like two years before this can be reached! Why not have automatic authorisations for increasing the production capacity of "x" percentage? Why should the process of "obtaining" clearance be enforced?


In the meantime, the Fertiliser Ministry is setting up a task force to draft a policy - in the next two-three weeks - to work out a new Policy. It seems the new fertiliser policy will be focusing on bio-fertilizers, organic products and micro-nutrients. It may be remembered that the Fertiliser Ministry has been demanding an increase in the domestic gas allocation to urea plants so as to replace the costly imported LNG, which is currently being used as feed stock by some. Such a move may save the government about Rs15,000 crore in subsidy. We need to increase the gas production from contractors like Cairn, Reliance, ONGC and GSPC.


The point that we make on this issue is all the gas and oil producers are already operating in their assigned territories after getting the needed MOEF clearances. Therefore, in order to increase their production, if possible, they should not be made to go through the regime of getting additional "clearances" for all those departments once again, as this means loss of time.


(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)



Dr Anantha K Ramdas

2 years ago

Mr Jatar: Thanks for your kind comments. The country is in need of oil and gas and we import more than what we produce within the country.

Therefore any increase in domestic production is an automatic savings by substitution. Over-production issue does not arise, and it won't for quite sometime to come, as our consumption is far more than what we produce.

Increased production is import substitution and saving in foreign exchange.

Except for attempting to produce shale gas or oil, which requires huge amount of water resources, which we do not have, any increase that we can get from natural resources of oil and gas wells should be appreciated.

If anything, the Government must come forward and offer an incentive to all the four main producers that they would be entitled to some kind of tax rebate for producing more than the targetted capacities. You must not forget that the Government imposed a penalty for not producing the target on Reliance who claimed and still stands by the claim that non availability of gas in KG-D6 was a geographical surprise for them.

Let DGH prove it otherwise.


Sudhir Jatar

In Reply to Dr Anantha K Ramdas 2 years ago

The total recoverable reserves are a known figure. You can apply advanced recovery techniques. That too is quantifiable. Normally, a field produces between 25 to 40 % of the total oil-in-place. Of course, there are instances of the recovery factor going beyond these figures also. It depends on the geological conditions and application of reservoir engineering techniques.
Hence, the question is whether you produce them in a manner that we get the maximum recovery factor. For this purpose, an optimum production per day is worked out so that the reservoir does not get damaged.
Oil reservoir is not like a water tank to open the tap and empty it. There have been many instances of over-production in the oil industry because of which the reservoirs have been damaged and the ultimate recovery is reduced.
The question of producing from shale in India does not arise because the shale found in India is not mature enough for production.

Sudhir Jatar

2 years ago

Automatic approvals is not realistic because the DGH has to check whether it is the optimum production and not over-production harming the reservoir for short-term gains.
Also the field with Vedanta now?
Sudhir Jatar

E-Filing survey: 80% use I-T department's free facility for filing returns

Over 70% feel satisfied with free e-filing facilitiy probided by the Income Tax department. However, only half are using tax calculators to verify


Our online survey on “Do you e-file of your tax returns” received 688 responses. At first glance, the survey shows that an overwhelming 65% are doing their own e-filing, while 26% are using the services of a tax advisor or a chartered accountant (CA). Only 13% are using paid e-filing sites when compared to nearly 80% using I-T department’s free e-filing website.

Over 70% of the respondents, who have used free e-filing feel that it is easy or somewhat easy. It means I-T department e-filing services have come a long way and still dominate, even though paid e-filing services claim to provide easy filing and better support. Six out of 10 respondents who have used paid e-filing are also satisfied and hence e-filing services are providing value for the charges. Those who file by visiting the I-T office to submit should consider e-filing for convenience and ease.

A good 87% claim to understand the calculations in tax returns. But, only one in two respondents have used online or offline tax calculator to verify tax computation. Tax calculators do help to catch any error in your tax returns preparation before it is e-filed.

Two out of 10 respondents have not looked at Form 26AS before filing tax returns. This is a matter of concern as you are overlooking the critical information that can even help to reduce taxes. For example, you may have missed the credits for TDS. On the other hand, the I-T department will catch you, if you failed to report the bank interest for which TDS was deducted.

Over 78% have easily got Form 16/16A from employer and banks, which means the process is now smooth. Only 44% out of those who were eligible for refund have received it within six months of tax filing. It means the majority of consumers are still struggling to get their tax refund even after six months delay. Nearly eight out of 10 respondents who were required to pay taxes found e-tax payment easy. It means you don’t have to visit banks to pay taxes. Tax payers are doing it online.



Mr Jitendra

2 years ago

Numbers tell a story:

Population of India - 126 crore
Population of Adults in India - 84 crores
Tax Returns filed per year - Approx 4 crores
i.e. 5% of Indian adults file tax returns.
Population of USA - 32 crores
Number of tax returns per year - 15 crores
i.e 47% of US population files returns

Revenue collected per capita for India - $284
Revenue collected per capita for China - $1600
Revenue collected per capita for USA - $17,464

Nifty, Sensex headed higher subject to dips: Weekly Market Report
Nifty has to stay above 7,850 for the rally to continue
The S&P BSE Sensex closed the week that ended on 22nd August at 26,420 (up 316 points or 1.21%), while the S&P CNX Nifty ended at 7,913 (up 122 points or 1.56%). Last week we had mentioned that if the Nifty closes below 7,700 then the indices may find it difficult to rise higher.
Monday was the fifth day of gain for the Nifty. The trading session after the optimistic speech of the Prime Minister, which emphasised better governance, making India a manufacturing and export powerhouse, coupled with employment generation, helped boost the market sentiment. The positivity of the European indices also helped the domestic indices. European stocks rallied on expectations of easing measures by the European Central Bank (ECB). Nifty closed Monday at 7,874 (up 82.55 points or 1.06%).
Although Nifty managed closing in the positive on Tuesday, it registered lower gains. Nifty closed at 7,898 (up 23 points or 0.30%).  Positive data from the US and UK helped the positive momentum on the benchmark indices to continue.
US homebuilders' sentiment improved in August to its highest since January, the National Association of Home Builders said on Monday, marking a third straight monthly gain. UK inflation cooled more than forecast in July, giving the Bank of England room to keep its key interest rates at a record-low. The rate of price growth fell to 1.6% from 1.9% in June.
After six days of consecutive positive trading, the market closed in the negative on Wednesday. Nifty closed at 7,875 (down 22 points or 0.28%). The Bank of England, in its minutes from August's policy meeting published in London, said the policy makers were split on rate increases.
On Thursday, Nifty edged towards recovering the previous day's loss and managed to close higher at 7,891 (up 16 points or 0.20%). The market move was because of the news that the government was working to tighten up risk management in the banking sector and with the reports mentioning that Oil Secretary Saurabh Chandra said that the under-recoveries of oil companies will come down substantially in the current fiscal.
On Friday the Nifty surged near its life time high and closed at 7,913 (up 22 points or 0.28%). Market moved higher with the on-going efforts of the government to strengthen the banking sector and the positive economic data coming from the US. 
The draft Cabinet note which proposes to create a holding company structure for state-run banks, aimed towards meeting their long-term capital needs, has been approved by Finance Minister Arun Jaitley.
Fewer than expected Americans applied for unemployment benefits last week and the existing home sales rose last month to the most since September. The Markit Economics preliminary index of US manufacturing in August jumped to the highest level since April 2010.
For the week, among the other indices on the NSE, the top two performers were PSU Bank (7%) and Pharma (6%) while the only worst performer was FMCG (1%).
Out of the 27 main sectors tracked by Moneylife, top five and the bottom five sectors for this week were:


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