Justification for extension of validity for Environmental Clearance

for PR-OSN-2004/1 Block

1. Background of the Block

Cairn India Limited (CIL) and its Joint Venture partners Oil Natural Gas Corporation Limited (35%) and

Tata Petrodyne Limited (30%) was awarded the offshore block known as ‘PR-OSN-2004/1’ during NELP-

VI licensing round in 2007. The Production Sharing Contract (PSC) was signed on 2nd

March 2007 and

became effective on 24th April 2007. Cairn is the designated Operator of the block and does all work on

behalf of the JV.

The block is located in Bay of Bengal adjacent to the coast line in the continental shelf area along the

coast of Andhra Pradesh and Tamil Nadu states. At the time of award, the Block covered 9416.54 sq.km.

2. Force Majeure – Invocation and revocation

The Directorate General of Hydrocarbons (DGH), through its letter dated 21st October 2010 (refer

Annexure-1) informed to CIL that Dept. of Space (DoS), Govt. of India has considered it not appropriate

to permit any activity related to survey/exploration near Satish Dhawan Space Centre (SDSC), Sriharikota

Range (SHAR) from the national security point of view. Therefore exploration in ~47% of the block, which

was a danger area linked to SHAR satellite launching, was restricted. One key hydrocarbon prospect fell

inside the restricted zone close to the northern boundary. Owing to these hindrances in exploration

operations, CIL invoked Force Majeure by notifying the same to DGH through its letter dated 27th October

2010 (refer Annexure-2).

The Force Majeure got duly approved by Management Committee through its resolution no. 15. However

the DGH conveyed through its letter no. DGH/Cairn/Expl/PR-OSN-2004_1/5b dated 5th September 2012

(refer Annexure-3), the MoPNG’s directive that as per PSC the invoked Force Majeure is not applicable in

cases of statutory / government approval delays and CIL can apply for extension on account of excusable

delay under the New Extension Policy of the government.

Continued efforts by MoPNG and DGH were made to resolve this impasse and on 31st January 2014

DGH informed through its letter no. DGH/Cairn/Expl/PR-OSN-2004_1/5b (refer Annexure-4) that DOS

has agreed to shift Northern boundary of the prohibited area near Sriharikota range by 7 kms. southwards

so that drilling activities on PR-8 could be undertaken.

Joint Venture Parties held an Operating Committee Meeting in February 2014 and agreed to resume the

exploration operations in the block based on below conditions:

Seeking clarity from DoS on permanent shift of the restriction boundary

Getting excusable delays without setoff phase-1 of exploration and PEL extension

Seeking special dispensation of 30 months for drilling preparations and operations

A meeting was held with Additional Secretary, DoS (Bangalore) on 16th April 2014 and a written

assurance for permanent shift of the boundary was received through the minutes of the meeting (refer

Annexure-5).

Cairn applied for grant of Excusable Delay and Special Dispensation of 30 months on 10th March 2014

(refer Annexure-6) and 9th June 2014 (refer Annexure-7) respectively.

DGH conveyed through its letter ref. DGH/Cairn/Expl/PR-OSN-2004_1/5b dated 15th July 2014 (refer

Annexure-8) grant of excusable delay of 185 days without set-off in Phase-I effective 31st January 2014

with regularization of the interim period from 24th April 2011 to 30

th January 2014.

Special Dispensation matter was referred to Empowered Committee of Secretaries which granted special

dispensation of 30 months in its meeting held on 31st December 2014 and the same was communicated

to CIL by DGH through its letter dated 15th January 2015 (refer Annexure-9).

3. Schedule of activities

The status of activities stipulated in Minimum Work Programme (MWP) as per the PSC is given below.

Activity MWP Status

RP (LKM) 1000 Completed

3D (Km2) 624 Completed

3D API 800 Completed

GM Survey (Stations) 1500 Completed

Satellite Gravity Survey 500 Completed

Wells 3 Being planned in Q2 2016

Management Committee has given approval for the 3 well Minimum Work Programme, long lead items

are being purchased and rig tender is in final stage. A maximum of 10 exploration and appraisal wells will

be drilled in the block.

4. Validity of Environmental Clearance

The Environmental clearance for exploratory and appraisal drilling of maximum 10 wells in PR-OSN-

2004/1 block was granted by MoEF on 24th January 2011 (refer Annexure-10) and is valid for 5 years, i.e.

till 23rd

January 2016. Time lost due to invocation of Force Majeure and in getting approvals for special

dispensation resulted in drilling not being carried out till date. In order to carry out exploratory drilling in

accordance with the revised project timelines i.e. Q2 2016, extension of validity for the Environment

Clearance is required.

21/10 2010 17:03 FAX 0120402488 Lai

'ecir ' 17F:1:-T174 ;1 ‘,,11**Ft PIMTI(t)Oting prifif47 Pi;-1161-4 311t4.1)

DURE4,,TORATE GENERAL OF H)CDROCAREIONS(Under Ministry of Petroleum & Natural Gas)

0-139, -63, -47.-.1-20 .1301 C . 139, Sector-63, Nokia. - 201301ST4111/Plione +91 . 120-4029400 Ike:RI/Fax : +91-120-4029410

Dr. Sunil BharatiGM—Exploration Business & MC MemberCairn Energy India Ltd.Orchid PlazaSuncity, Sector-54Gurgaon -122 002

t-ax 0124-288 9320

21.10.2010

Sub: Exploration Block PR-OSN-2004/1-- Permission forexploratory drilling and related petroleum operations in the block

With reference to the above subject, it is informed that matter regardingexploratory drilling and related petroleum operations in the prohibitedzone notified by Satish Dhawan Space Centre, SHAR was taken up byMOPNG with Department of Space, Govt of India. MOPNG vide letter dated:P9.10.2010 has informed that Department of Space has considered notappropriate to permit any activity of survey/exploration near SDSC,Sriharikota, from the National Security point of view besides the othertechnical reasons."This is for your kind information and further planning in the block PR-OSN-2004/1.

Yours faithfully

q52EA-,\,/(Harish Chandra Srivastava) fl-t' \r) ri-b \ 0

Chief Geophysicist (S)FAX 0

21 OCT nth

IN

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Annexure-2

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Annexure 3

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Annexure 4

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Annexure 5

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Annexure 6

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Annexure 7

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Annexure 8

(DGH)

q~)~~'1 ~ ~lICP~q; ~~ ~~

DIRECTORATE GENERAL OF HVDROCARBONS Ministry of Petroleum & Natural Gas

Government of India

DGH/Cairn/Expl/PR-OSN-2004_1/5b Date: 15-01-2015

Dr. Nicholas Whiteley GM-Exploration Cairn India Ltd . 3rd Floor, Vipul Plaza Suncity, Sector- 54 Gurgaon -122 002

Fax 0124-2889320

Sub: PR-OSN-2004/1 -Approval of ECS

Sir,

This is with reference to the ECS meeting held on 31/12/2014 on the issue of grant of Special Dispensation in the block PR-OSN-2004/1. MoPNG vide letter dated 13-01-2015 has conveyed the decision of ECS on the issue as mentioned below.

Quote

"ECS has approved grant of 30 months extension to Phase I from the date of

approval by ECS, i.e., 31/12/2014, for drilling three wells as per MWP along with

approval for allowing the intervening period from the end of Phase I, i.e. 05-08-2014

till date of this approval as excusable delay. "

Unquote

Yours sincerely,

? Ifl'f"~ ~Jatish ain) Nodal Officer

OIDB BHAWAN, TOWER-A, PLOT NO.2, SECTOR-73, NOIDA - 201 301 ~/Phone: +91-120-2472000 ~/Fax: +91-120-2472049

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Annexure 10

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Annexure IV