Cairn said KG block operationally infeasible

Only 40 per cent of the original contract area is feasible for proper and effective exploration, it says

Weeks after Cabinet Committee on Investment eased defence ministry's 'No-Go' restriction on oil blocks, Cairn India has told the Oil Ministry that a large part of its KG basin block has become operationally infeasible because of new limitations imposed.

CCI had in March lifted 'No-Go' restrictions on Reliance Industries' three blocks including its gas producing KG-D6 and discovery area of NEC-25. It, however, cleared only a portion of KG basin blocks of Cairn and state-owned ONGC as the rest was within the impact zone of IAF's Suryalanka Guided Weapon Firing Range (GWFR) and Machhlipatnam launch site.

Cairn on April 26 wrote to the Ministry saying post-CCI decision, 35 per cent of its KG-OSN-2009/3 block is 'No-Go Area, which runs right through the block, leaving small portions on either side for exploration.

"Of the remaining block area, 20 per cent of the area is 'clear area' and the remaining area is 'High Risk Area', where exploration activity has been permitted with certain conditions," it said.

Stating that it was prepared to "reconcile and proceed with the significantly reduced area," the company said the currently area was neither "geometrical nor conducive to conduct proper and effective exploration campaign."

Cairn said a quarter of the block area falling on both sides of "no go area" is operationally not feasible and offered to surrender it to the government.

"Only 40 per cent of the original contract area is feasible for proper and effective exploration," it wrote.

Cairn, which discovered India's biggest oil field in Rajasthan, wanted its minimum work commitment cut in proportion to reduction in operationally feasible block area.

In all, 8 blocks including RIL's Krishna Godavari basin KG-D6 block and gas discovery area of NEC-25 in the North East Coast (NEC) region, were declared "No-Go" zones for reasons like overlapping with proposed Naval base or being close to missile launching and Air Force exercise area.

The CCI cleared five blocks of the "No-Go" restrictions while three others will continue to be No-Go areas.

RIL's KG-D6, which has been producing oil since September 2008 and gas from April 2009, was fully cleared for oil and gas activity with total area of 7,645 sq km reduced by 495 sq km to meet defence needs.

Similarly, its NEC-OSN-97/2, where six gas finds have so far been made, cleared after the portion of the block nearest to the coast was relinquished and the remaining portion was found to be beyond 100 km from the Chandipur Missle launch of DRDO and Balasore air-to-air firing range of IAF.

RIL's KG-OSN-2001/1 was also cleared but the block had already been relinquished by the operator, sources said.

ONGC's KG basin blocks KG-OSN-2005/1 and KG-OSN-2005/2 and BG Group's KG-DWN-2009/1 will remain "No-Go" areas as they fell directly within a proposed naval base.