ONGC approves Cairn raising Bhagyam field cost: report

State-owned Oil and Natural Gas Corp (ONGC) has given nod to its partner Cairn India for raising the cost of developing the second biggest oilfield in the prolific Rajasthan block by 30 per cent to $608 million, according to sources.

Cairn India has revised the development plan of the Bhagyam field in the block by raising the capex required to $607.97 million from $469.6 million.

ONGC's board has approved the revised cost, sources privy to the development said.

Originally, Cairn, which is the operator of the Rajasthan block with 70 per cent interest, had in October 2009 pegged the Bhagyam field development cost at $526.1 million.

Later, with a view to expediting the project implementation, it optimised the field development plan (FDP) in August 2010, bringing it down to $469.6 million.

ONGC holds the remaining 30 per cent interest in the Rajasthan block.

Sources said Cairn had in the FDP proposed to drill 81 wells to produce a plateau of 40,000 barrels of oil per day (2 million tons a year). An estimated 93.6 million barrels out of ultimate reserves of 415 million barrels was to be recovered till May 2020.

However, the Bhagyam field, which was put on production in January 2012 has lagged the forecasts.

In May last year, Cairn proposed what is known as Bhagyam FDP Revision-1, proposing to drill additional 54 wells.

Under the new plan, Cairn has increased the reserves to 525 million barrels from 415 million barrel previously but the cumulative production is envisaged at 85.56 million barrels as compared to 93.05 million till May 2020.

Bhagyam is the second biggest of the 28 oil and gas discoveries Cairn has made in the Rajasthan block. At present, it produces over 190,000 barrels per day of crude oil from the block with about 150,000 bpd coming from the giant Mangala field. Bhagyam produces over 25,000 bpd.