The Cabinet Committee on Economic Affairs (CCEA) today approved splitting of an oil and gas block falling in Assam and Nagaland into two so that exploration that previously could not be completed in Nagaland can now be taken up.

A meeting of the CCEA, chaired by Prime Minister Manmohan Singh, approved "splitting of the Production Sharing Contract (PSC) for Block AA-ON/7 in two parts, to consider separate exploration period of Nagaland part of the block," an official statement said.

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About 1,126 sq km area of the block was in Assam and the remaining 808 sq km in Nagaland. Petroleum Exploration Licence (PEL) for Assam portion of the block was granted on March 27, 2001 and that for Nagaland portion was granted by the state government on August 8, 2006.

The statement said though the exploration was completed in Assam portion of the block, no work could be carried out in Nagaland before the expiry of seven-year exploration phase on March 26, 2008.

"The main objective of the approval is to enable carrying out an additional exploration work programme in Nagaland portion of the block by signing of separate PSC for Nagaland portion at terms and conditions not inferior to existing terms and conditions in the present PSC," it said.

A separate PSC for Nagaland portion of the block would be signed with the seven year exploration phase beginning August 9, 2006 and Canoro would carry out exploration work, including drilling of at least two wells.

"Special dispensation will facilitate exploration in the frontier area of Nagaland and the objective of accelerated exploration of hydrocarbons will be accomplished," the statement said. "The proposal would be implemented immediately and a new PSC will be signed between the Government and the contractor (Canoro)," it added.

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