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Cairn vs. Government: Rajasthan oil block dispute

 Cairn India’s Rajasthan oil block license extension is stuck in a dispute over cost and the firm is surviving on monthly extensions by the government, sources said. 



The government had agreed in October 2018 to extend the contract by 10 years for Barmer fields in Rajasthan after the expiry of the initial 25-year contract period on May 14, 2020. The extension was subject to Vedanta Group firm agreeing to raise the share of the government’s profit from oil and gas produced from the block by 10 percent. 

While Cairn protested against the additional payout and took the government to court, the extension was subsequently held up due to the government claiming additional profit petroleum after re-allocating Rs 2,723 crore common cost between different fields in the block and disallowance of Rs 1,508 crore cost on a pipeline, sources privy to the development said. 

Now the government wants the company to clear the dues before the extension is granted, they said adding the company has disputed the demand and issued a notice of arbitration to resolve the differences. 

Pending resolution, the government first gave the company a three-month extension of the production sharing contract (PSC) for the Rajasthan block, which houses the prolific Mangla, Bhagyam and Aishwariya oilfields, till August 15, 2020. 

It subsequently extended the PSC by 15 days and then by a month till September 30, sources said. 

According to Hindustan Times, a company spokesperson said, “The Rajasthan PSC allows extension on the same terms for a period of 10 years in case of commercial gas production and we are accordingly eligible for the extension.” The block, it said, produces more than 20 percent of India’s crude oil production and has the potential to double this over the next 3 years. 

“This requires a reduction in fiscal levies and administrative support for timely approvals,” the spokesperson said. “We have referred a few matters to arbitration that we were not able to mutually resolve.” The company, however, didn’t provide details. 

“We are hopeful to see some positive outcomes, we are committed to producing in this block and contribute significantly towards a self-reliant economy,” the spokesperson added. 

Sources said the Directorate General of Hydrocarbons (DGH), the upstream nodal authority of the Oil Ministry, on October 26, 2018, granted its approval for a ten-year extension of the Production Sharing Contract (PSC) for the Rajasthan Block (RJ), with effect from May 15, 2020 subject to payment of additional profit petroleum.

~ Rishab Soni

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IOC planning a future in Hydrogen

 “Indian oil corporation to deploy 50 buses around the capital powered by a blend of hydrogen and CNG”, Chairman Shrikant Madhav Vaidya said. The fleet is to serve the public and is planned to start as soon as this year, potentially creating a new market for producer trying to rebound from its first annual loss in at least 20 years. 



Hydrogen is versed as a fuel of the future and has been praised as a key to fight climate change by energy enthusiasts all over the world. “Hydrogen seems to be the most disruptive and has the potential to grow 10 times between now and 2050”, said Giovanni Serio, global head of research at Vitol Group. ”It could be the one to solve the problem of storing energy and also addressing later the demand from the transportation sector.” 

According to a report by BloombergNEF, nearly $11 trillion of investment in production, storage and transport infrastructure is needed for hydrogen to meet about a quarter of the world’s energy needs by 2050. 

Hydrogen is considered advantageous in many ways because of its high energy density, the flexibility of production sources, a wide range of applications, and no greenhouse emission, but there are some downsides as well. As the current production methods are polluting and the explosion of hydrogen tanks in South Korea and Norway last year have brought up safety concerns as well. 

That aside, IOC isn’t the only one to look hydrogen as the future, China-based, Sinopec will integrate hydrogen into its retail fuel stations around Beijing and Norway’s Equinor ASA is building a large carbon capture and storage facility that could be a source of hydrogen. So, it can be concluded that soon hydrogen is to be seen in the energy sector as a brand new commodity and will play a visible role in the transition of the energy sector. 


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SEE MORE: BHAVNAGAR, GUJARAT TO HOLD WORLD'S FIRST "cng" TERMINAL

Bhavnagar, Gujarat to hold World's first CNG Terminal

In a recent press conference, CM of Gujarat Vijay Rupani shared the information about the ‘Mega Project’ that is to be developed in Bhavnagar. Gujarat has sanctioned a budget of ₹ 1,900 cr. for CNG Terminal merger project which is going to developed by the consortium of developers. The two names that comes in the front foot are Mumbai based Padmanabh Mafatlal Group and U.K. headquartered Foresight group. 



In the first phase the ₹ 1,300 cr. will be invested by the consortium and the other ₹ 600 cr. will be invested in the second phase. 

In this project the terminal and existing port are going to get modified majorly, also the existing infrastructure will face several modifications according to the requirements. The project consists of dredging in the water channel of the port basin, construction of two lock gates, off-shore infrastructure for CNG transportation. Liquid cargo terminal, container terminal, and Ro-Ro (Roll-on Roll-off) ferry service would be developed. With this project, the Bhavnagar cargo capacity will increase to 9 MMTPA. 

After this project, Gujarat will be the only state in the country to have both LNG and CNG terminals. 

The project will also benefit the residents of Bhavnagar and its neighboring areas, vast employment opportunities will be generated. The scope of transportation and storage will increase. CNG based vehicles are expected to take a leap forward due to this project.


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