It is not clear if the global energy players prime minister Narendra Modi met earlier this week will pay much heed to his plea for a review of payment terms for oil—to allow more payment in rupees to stem the currency’s fall—but it is clear the matter is a serious one. At $48 billion in April to August this year—$87.3 billion for all of FY18—crude oil imports rose by 56% over that a year ago in the same period. The prime minister would, however, be better served if he concentrated on raising levels of domestic production of oil and gas instead; the lessons from Cairn Energy of the UK are important in this context.
In 2002, Cairn paid $12 million to Shell to buy its assets in Rajasthan, drilled 15 wells that were dry and then struck oil in the 16th. After extracting around 460 million barrels already, the estimate is that the Rajasthan assets will yield another one billion barrels over their lifetime. All told, Cairn—now owned by Vedanta Limited—produces over a fourth of India’s crude oil and, till date, it has given $17.1 billion to the Centre and Rajasthan in taxes/cesses/royalty and another $3.4 billion to ONGC as its share of profits in the joint venture; all told, that totals $20.5 billion or 85% of its revenues after paying for the opex and capex. Read more
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