Bouyed by government's reform push in oil and gas sector, Cairn India said on Monday it hopes for an early resolution to extension of its Rajasthan oil block licence and a decision on higher price.
The company, which had taken the government to court seeking extension of Rajasthan licence and higher oil prices, said the government has made bold and decisive move in announcing future contractual model, gas prices and licence extension.
In a big reform, the government on March 10 approved pricing freedom to undeveloped gas discoveries in difficult areas, brought in a more liberal fiscal regime for future oil and gas exploration and extended contracts for 28 small and medium sized oil and gas fields.
However, Cairn's Rajasthan block was kept out of this extension policy. "In wake of these developments, we are hopeful for an early resolution of PSC extension of Rajasthan block and realisation of fair price for our crude. This will also help India take a step closer to energy security," Cairn India CEO Mayank Ashar said in a press statement.
Stating that the government has, directionally, taken the right step by announcing the gas price reforms, he said deep-water projects are technically complex and challenging and the move will help fast-track development.
"We are hopeful, going forward such reforms shall also be extended to other difficult fields including more complex geological formations like tight oil, tight gas and enhanced oil recovery (EoR) projects," he said.
Cairn is implementing the world's largest EOR project in its Rajasthan oil block. "It is heartening to see the government playing an enabling role in reforming the policy landscape to seek more investments in the hydrocarbon sector too," he said.
"Investors will now have better visibility on such key determinants for planning their investments," he added.
Ashar said allowing access to all forms of hydrocarbons, marketing and pricing freedom for gas and moving towards an open acreage licensing system are a quantum change in the E&P sector governance in the country.
"We hope the government will also extend this to existing producing acreages where similar hydrocarbon potential can be tapped into. Existing operators are most-suited to develop both the unconventional and the conventional resources given their knowledge of the basins they are operating," he said.
He said the licence extension policy for 28 discovered fields brings in predictability and clarity for existing investors who can now take informed decisions on the future of their producing blocks.