Sarraf happy with Cairn as RJ-ON-90/1 operator

Vol 17, PW 23 (03 Jul 14) People & Policy

ONGC chairman DK Sarraf is opposed to a proposal to kick out Cairn as operator of Rajasthan block RJ-ON-90/1 after the PSC ends on May 14, 2020.

“We shouldn’t send out a message that we are happy to use Cairn to make discoveries but when it comes to production we want them to leave the block so we can take over,” says Sarraf, in an exclusive interview with this report. "Such a move would hit investor confidence in India.

" Sarraf's comments follow an ONGC board meeting on June 27 which heard a report from a committee of six ONGC executive directors on Cairn's demand for a 10-year PSC extension beyond 2020. On the table are three options: refuse Cairn’s extension demand and take over the block after 2020; increase ONGC’s stake after techno-commercial studies; or postpone the decision to 2016 with four years left to PSC expiry.

Sarraf admits ONGC is yet to reach a decision but wants a formula where everyone leaves the negotiation table smiling. "ONGC is a government company,” he says.

“We must consider the nation’s interests, not just ONGC’s interests." Cairn unilaterally asked the oil ministry and DGH to approve a PSC extension in March this year but was chastised for failing to consult partner ONGC and was subsequently asked to re-submit a proposal with ONGC's consent.