Cairn set to begin exploration in Krishna-Godavari offshore block

Now that the Defence Ministry has withdrawn its objection, oil company Cairn India is set to begin exploration at a promising offshore block in the Krishna-Godavari basin, next to its prolific Ravva field on the eastern coast of the country.

In the next quarter, the Anil Agarwal-led company will begin seismic shoots (or imaging the earth below by sending shock waves and capturing their reflection) in the KG-OSN-2009/3 block, Chief Executive P Elango said. Cairn won the 1,988 sq km block in 2010, in the eighth round of the NELP (New Exploration Licensing Policy) bidding of hydrocarbon assets. The Ministry of Defence put a stopper on Cairn’s plans for the block as it had plans for its own activities in the area. A two-year wait came to an end for Cairn two months back when the ministry, at the behest of the Cabinet Committee for Investments, agreed to let the oil company go ahead with its plans on one part of the block, which constitutes about 60 per cent of the area.

Cairn told the Ministry of Petroleum and Natural Gas it would surrender the other 40 per cent, provided the latter would correspondingly reduce its agreed “minimum work programme” for the block. In the hydrocarbons business, nobody can predict a find unless a company drills and gets to it, but since this block is next to the ‘jewel’ Ravva, Cairn is optimistic.

After Rajasthan, K-G

After striking pay dirt in Rajasthan, Cairn sees the KG basin as its next frontier. The company has three immediate plans for the basin. The first is to keep up or raise production from Ravva, in which it has a 22.5 per cent stake. The 17-year-old field is producing 22,000 barrels of oil a day (or about 3,000 tonnes). A recent seismic survey showed the scope for more, from a new prospect in the field named LO-110. Second, Cairn will explore the KG offshore block. The third is a challenging onshore quest. At Nagayalanka in Andhra Pradesh, a joint venture of Cairn and state-run ONGC has found scope for producing 10,000 barrels of oil a day. (Cairn owns 49 per cent in the venture and is in charge of operations).

In Nagayalanka, oil lies at a very high pressure under hard rocks, and it would cost Rs. 100 crore to drill a well here, compared with Rs. 25-30 crore for a conventional on-shore well. Fracking techniques will have to be used. Elango describes Cairn’s K-G campaign as the company’s “re-emergence on the east coast”. Cairn began its Indian innings in 1996 when it took over Ravva from the Australian Command Petroleum.

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