India ONGC has negative NPV from Cairn block-govt
MUMBAI, July 13 (Reuters) - India's Oil and Natural Gas (ONGC.BO) has a negative net present value on its investment in Cairn India's (CAIL.BO) Rajasthan block under the revised field development plan, the petroleum minister said on Monday.
Cairn India, which is a subsidiary of UK explorer Cairn Energy (CNE.L), holds a 70 percent stake in RJ-ON-90/1 block in Western India and state-run ONGC holds the balance.
"Under the existing set of fiscal terms and conditions, ONGC has negative present value for its investment in the revised FDP (field development plan)," Murli Deora said in a written reply to a question in parliament query.
The projected crude oil production from the block is 2.6 million metric tonnes (MMT) in 2009/10 and 6.8 MMT in 2010/11 with a peak production of 8.9 MMT per annum.
Deora said ONGC had not approved Cairn India's entire investment plan, but had approved its 30 percent share of the revised field development plan amounting to $729 million.
Total capital expenditure of $2.43 billion was estimated in the field development plan for the block.
ONGC is the licensee of the block, making it liable for royalties on the entire crude production from the block, which is expected to start producing soon. The state-run explorer has said it expects the government would reimburse it for royalties it would have to pay beyond its 30 percent stake in the block. [ID:nBOM175051] India is Asia's third-largest oil consumer. It imports 70 percent of its oil needs, and the government is keen to tap domestic reservoirs to help bring down its dependence on imports. (Reporting by Ami Shah; Editing by John Mair)
