The stand-off between Cairn India and state-run ONGC has hit daily operations in their

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prolific onshore oil fields in Barmer and there are fears production targets may be hampered.

Currently, 125,000 barrels of oil is pumped out from Barmer every day. Cairn India claims that output can be ramped up by 20 per cent to 150,000 barrels per day (bpd) immediately on getting government approval.

Senior officials at oil regulator Directorate General of Hydrocarbons (DGH) told Financial Chronicle on Wednesday that the companies is yet to seek permission to ramp up production.

The delay in seeking regulatory approval is due to management committee not yet providing the routine approvals to the operation of the block.

The management committee of every block under the production-sharing contract is expected to meet once every quarter to review expenditure and take decisions related to award of contracts and further development of the field. However, the panel for Barmer block has not been meeting regularly on a quarterly basis.

In January this year, Cairn India approached the nodal oil ministry and expressed serious concern over several matters pending including irregular meeting of the management committee.

ONGC, which is the licensee of the block, is chairperson of management committee for the Barmer block. Regulator has little role to play if the companies do not finalise decisions on daily operations, said the DGH official.

ONGC however claims that it is the responsibility of operator (Cairn India) to apprise chairperson of management committee and arrange meetings every quarter. “The operator must admit its responsibilities. There is no use of blaming ONGC or oil regulator for discrepancies,” said a senior ONGC official, who didn’t wish to be quoted.

Cairn India didn’t respond to this newspaper’s queries.

The thorny issue between ONGC and Cairn India is on sharing of royalty payment for the block. Cairn India is the operator of the block and holds 70 per cent stake, whereas ONGC has 30 percent participating interest in the acreage.

ONGC has raised the issue that royalty paid is ‘cost recoverable’ from the common pool of revenue before profit petroleum is calculated. At present, ONGC is paying royalty on Cairn’s behalf. As per provisional calculations, the total royalty burden over the project life of the PSC is around Rs 18,000 crore. Out of this, ONGC has to bear Cairn’s share of nearly Rs 12,600 crore.

The conflict became more serious after UK-based Cairn Energy, who owns 62.25 per cent stake in Cairn India, proposed to sell 51 per cent to London-based Vedanta Resources for more than $ 9.6 billion in August last year.

ONGC wants the issue to be resolved before government gives a go-ahead to the proposed multi billion-dollar deal between Cairn Energy and Vedanta Resources.