Cairn’s Rajasthan oil block licence stuck in cost dispute; hangs by monthly extensions

Billionaire Anil Agarwal-led Cairn India’s Rajasthan oil block licence extension is stuck in a dispute over cost and the firm is literally surviving on monthly extensions by the government, sources said.

The government had in October 2018 agreed to extend by 10 years the contract for Barmer fields in Rajasthan after the expiry of the initial 25-year contract period on May 14, 2020. This 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 per cent.

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.