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The state-run Oil and Natural Gas Corp. Ltd will invest $730 million in a Cairn India block in Rajasthan, despite expecting negative returns, Petroleum Minister Murli Deora said on Monday.
In a written reply to the Rajya Sabha, Deora said that ONGC's board has not approved investment plans of Cairn India, but it has given approval to its 30 percent share of revised Field Development Plan for block RJ-ON-90/1 in Rajasthan.
While the total capital expenditure is $2.4 billion, ONGC's share will be $729.4 million. "Under the existing set of fiscal terms and conditions, ONGC has negative net present value for its investment in the revised FDP," Deora said.
According to the reply, the main reason for the increase in cost was due to the increase in plateau production rate from 96,000 barrels of oil per day to 125,000 bpd, change in production method, update cost estimated and increase in service tax.
