India Energy Week: Cairn dives into deepwater exploration with KG basin

Vedanta-backed firm plans to rope in global players for offshore drilling

In a major foray into deepwater exploration, Cairn Oil & Gas is planning to drill five-six wells in its offshore KG basin block by next year, and the wells could hold a billion barrels of crude oil, Chief Financial Officer (CFO) Hitesh Vaid told Business Standard.

 

As part of the foray, the upstream company is aiming to sign up major global project management, engineering and construction companies in the energy domain, including Petrofac, Technip, and OneSubsea, to execute the project, Vaid said on the sidelines of the ongoing India Energy Week.

 

Part of the Vedanta group, Cairn had acquired the block in an earlier Open Acreage Licensing (OALP) round.

 

Located off the coast of Andhra Pradesh in the oil-rich Krishna-Godavari basin, the block covers 4,500 square km, which is large. Reliance Industries had relinquished the block earlier after making a discovery.

 

“The block is attractive. While we have discoveries in the block, we have exploration prospects. In terms of potential, it could give us a billion barrels. Last month, we gave a contract to a company to bring in a vessel to provide us data based on resistivity tests,” Vaid said.

 

Agreeing that while deepwater exploration is not part of Cairn’s skillset — the firm has operated mostly in shallow waters — Vaid said the upcoming dataset would combine with Cairn’s own seismic data to give the company more clarity.

 

Data collection will begin in March, and the company expects to have clarity on the matter by May. Cairn has been working on the project for the past 18 months.

 

While the company has a portfolio of 10-12 wells in the area, it aims to whittle this down to five-six. This decision has been taken owing to the massive cost of offshore drilling, estimated at $50 million per well, Vaid said.

 

Global tieups for bidding

 

As part of a larger deepwater play, the company is aiming to tie up with foreign players to bid for deepwater and ultra deepwater blocks in the newly opened 10th round of bidding for oil and gas assets.

 

“A lot of global companies want to come to India now because the Oilfields (Regulation and Development) Act has been amended and the government has gone for a bigger ultra deep water round (of bidding). A lot of these companies want an Indian partner, and who is better than us, who have been here for 25 years. There’s a lot of engagement going on,” Vaid said.

 

Deepwater exploration in India has so far been dominated by state-run Oil and Natural Gas Corporation, which has drilled more than 100 deepwater wells since 2004.

 

Drilling in the KG basin is expected to shore up the company’s profile and help it in attracting partners. Global corporations are also keen on the company’s portfolio of shallow waters on the west coast, which is expected to grow threefold, and its ongoing projects in the Northeast, the CFO said.

 

Most global companies are keen on offshore exploration possibilities rather than onshore, which suffer from land access.