Essar Oil Limited has stuck oil in its Mehsana onshore exploration block CB ON-3 in Gujarat. This is the second oil discovery in the block by Essar, the first being in March this year.

The in-place reserve of the first discovery was an estimated 18 million barrels of oil and oil equivalent with recoverable reserves in the range of 2.8 million barrels of oil equivalent. Essar is producing around of 500 barrels of oil a day from the March discovery.

Sources said the new discovery was also of the same magnitude, promising to produce 300-400 barrels of oil a day.

Confirming the move, sources in the Directorate General of Hydrocarbons (DGH ) said the recent oil discovery had been notified by Essar on July 12.

"Essar has discovered oil in the well, ENM-1, in the Mehsana exploration block, using the heater treater technology. Oil flowed to the surface last week in the presence of Essar and ONGC executives. The well is expected to produce around 50-60 barrels of oil a day and the plan is to drill another 6-7 prospects shortly to produce around 300-400 barrels of oil a day," said a senior ONGC executive.

The crude oil discovered is heavy in consistency, unlike the medium-quality oil produced by Essar from its first discovery in the block. Essar has started selling 500 barrels of oil a day from its first discovery to Indian Oil Corporation's Koyali refinery in Gujarat.

The CB-ON3 block was awarded to Essar Oil in 1998 and is located in the petroliferous Cambay Basin in Gujarat. Essar, which is the operator, holds 70% in the block, while ONGC has the remaining 30%.

Earlier, Essar Oil was the 100% stakeholder of this block, with ONGC as the licensee. But, soon after Essar announced the first oil discovery in the block, ONGC exercised its right and picked up a 30% equity. The block is spread over an area of 500 sq km. Essar has already carried out 3D seismic surveys over 145 sq km.