By an OGJ correspondent
MUMBAI, Sept. 16 -- India's state-owned Oil & Natural Gas Corporation (ONGC) has increased its equity stake in Cairn Energy PLC's Cambay offshore oil and natural gas discovery block to 40% from 10%.
Block CB/OS-2 contains Gauri oil and gas field off Gujarat state. Cairn earlier held a 75% exploration interest, and is the operator for the joint venture, in which India's Tata Group is the third partner with a 15% stake.
ONGC had retained the right to increase its stake to 40% in the event of a commercial discovery on the block. With Gauri gas field being declared commercial in July, ONGC has exercised that option. Cairn has made five hydrocarbon discoveries on the block since 2000: Lakshmi (gas), Lakshmi (oil), Gauri (gas and oil), Ambe (gas and oil), and Parvati (oil).
A few months ago, ONGC had exercised a similar right in the ring-fenced Lakshmi development area. Following that development, Cairn now holds 50% in Lakshmi, ONGC 40% and Tata 10%.
Development details
Sources revealed that some of the Gauri reservoirs are in communication with the adjacent producing Hazira field, which is operated by Calgary-based Nikko Resources Ltd.
Lakshmi development is under way, with first gas expected in October.
Two gas sales contracts have been signed with local utilities Gujarat Powergen Energy Corp. and Gujarat Gas Co. Ltd. for the sale of gas from Lakshmi into the industrialized Gujarat market. The Lakshmi facilities will initially have a maximum gas production and processing capacity of 150 MMcfd.
Current reserve estimates for Gauri gas are 60-200 bcf. Development plan options, anticipating an initial 40 MMcfd, are under consideration by the joint venture. Oil has also been discovered beneath the gas reservoirs at Gauri, for which further appraisal would be required to evaluate the potential. This is expected to coincide with the gas development drilling program, planned to get under way next year.
