Cairn India Limited - Ravva History and Vision

1
Ravva
Celebrating 16 Years of Technical Excellence
Pioneering Development History Vision
2
RAVVA Celebrating 16 years of Technical
Excellence Pioneering Development History and
Vision At the time of independence, Indias
domestic oil production was a mere 250,000 tonnes
per annum. That amount came from Assam, the sole
oil producing state in India. Foreign companies
entered the Indian exploration production scene
in the early fifties but their presence was not
very significant in Asia. By the start of the
1990s, oil and gas majors had drilled more than
12,000 wells in Asia but only 12 in India. Most
foreign experts were writing off India as a place
to discover new petroleum reserves. As part of
its liberalisation initiatives in the early
1990s, the Government of India (GoI) brought the
Petroleum Sector Reforms (PSR) to actively
encourage the participation of foreign oil
and gas majors. The aim was to facilitate private
investment in the sector, introduce state of the
art technology and bolster the dwindling foreign
exchange reserves of the country. The GoI
developed the International Competitive Bidding
(ICB) policy to identify those private entities
who would be allowed the rights to develop
specific blocks. These block were ones which the
National Oil Companies had found to be
subeconomic under the prevailing pricing policies
and investment requirements. The policy
required a competent foreign operator but allowed
Indian companies with or without previous
experience in E P activities also to bid. The
National Oil Companies were required to have a
minimum 25 to 40 participating interest from
day one. Until the PSR, the three earlier rounds
of exploration bidding had yielded no
exploration successes, though only foreign
companies were allowed to bid. The blocks
identified under the ICB policy were
? ? ?
Panna-Mukta Tapti (Mumbai offshore) Ravva
(Andhra Pradesh offshore) Baghawala (Rajasthan)
The interested parties were exploration and
production (EP) players like Petronas,
BHP, HOEC, CNPC, and industrial houses like Tatas
and Videocon. The Ravva block, situated off the
coast of Andhra Pradesh, was estimated to produce
101 million barrels of crude oil and would have
required an investment of around USD 450 million
to develop. Videocon originally bid for the Ravva
block but in order to meet the GoI requirement
for an operator with experience in EP
operations, Command Petroleum from Australia
was brought in. The unincorporated joint venture
(UJV) comprising of ONGC (40), Videocon
(30) and Command Petroleum (30) submitted the
bid. After the bidding and protracted
negotiations, the UJV won the Ravva block and the
Production Sharing Contract (PSC) was signed in
1994. The UJV took over the existing assets and
facilities from ONGC and within a short span of
18 months increased the production from 3,500
bopd to 35,000 bopd.
3
RAVVA Celebrating 16 years of Technical
Excellence Pioneering Development
In 1996, Cairn Energy PLC acquired Command
Petroleum and became the operator of the Ravva
block.
Ravva was a strategic fit for Cairn, as the
company wanted to increase its presence in South
Asia.
Cairns investment to acquire Command Petroleum
proved to be a sound investment decision and
paved the way for future growth in the country.
The field also added a development success story
to Cairns exploration portfolio.
The initial vision was to develop Ravva as a
model oil and gas field in India. As the Ravva
JV pioneered development of the Ravva field, the
focus was on minimising costs and
maintaining volumes through the application of
innovative processes and new technology.
Ravva has evolved into one of the lowest cost
fields globally, profitable even when oil
prices ranged from USD 9 to 12 per barrel.
Over the years, the Ravva JV has produced more
than 220 million barrels from Ravva. The GoI has
earned revenues on account of profit petroleum of
approximately USD 4 billion (Rs.16,000 crore).
This stands at the peak rate of 60 per cent and
will continue until the end of the PSC term.
Ravva pioneered many operational firsts in India,
such as private helicopter licenses, an offshore
loading point for crude sales, a helibase at
S.Yanam, the US Dollar to Indian Rupee conversion
of sales tax, and invoicing in dollars for a
product produced in India. The Ravva JV worked
closely with the Government to secure various
approvals and develop the block in a timely
manner.
The Ravva JVs focus continues to be keeping the
costs to a minimum while maintaining
steady volumes.
The Ravva block still holds potential and with
the aid of innovative technologies, the Ravva JVs
aim is to leverage and extend its prospects over
the PSC term until 2019.