Cairn to commence oil production from Rajasthan in August


"We are operationally ready to commence oil production in August," Cairn CEO Rahul Dhir said.

More than six decades after India gained independence from the British raj, a unit of UK's Cairn is helping the one billion nation boost its oil production of around 680,000 barrels per day (bpd) by over a quarter.

Cairn had given the nation its most prolific oil find in more than two decades since Oil and Natural Gas Corporation (ONGC) discovered the Gandhar field in Gujarat.

Cairn's Rajasthan oil fields will bring down India's oil import bill by USD 6.8 billion or 7 per cent, Goldman Sachs said, adding that peak output from the fields is likely to be 190,000 bpd (9.5 million tonnes a year).

Cairn has said the output will quickly touch 30,000 bpd by the end of third quarter this year and reach a plateau of 175,000 bpd (8.75 million tonnes a year) in 2011.

Dhir said pricing negotiations for the initial off-take from Rajasthan crude have been concluded with the government of India nominees which are the Indian Oil Corp (IOC) and Mangalore Refinery and Petrochemicals Ltd.

"We have concluded pricing negotiations with MRPL and IOC for the initial quantities of crude from Rajasthan which currently represents a 10 to 15 per cent discount to Brent."

The government has approved the revised Mangala field development plan including pipeline and higher processing capacity of 205,000 barrels per day, a Cairn statement said.

The company has drilled 28 wells on the Mangala oilfield in the Rajasthan blocks, out of which 16 have been completed and are ready to start production.

The first processing train of 30,000 barrels per day capacity is ready and the second unit would be ready by the fourth quarter of 2009.

"Cairn is working with the government authorities to start production from the Mangala field in Rajasthan in August," the statement said.

The pipeline transporting crude from the deserts of Rajasthan to the Gujarat coast will also be completed by end of 2009.

Train three (50,000 bpd) which will follow Train two is on target to attain Mangala plateau production of 125,000 bpd by H1 2010.

Cairn reported a net profit of Rs 45.44 crore in the quarter ended June 30 as against Rs 138.58 crore in the same period last fiscal.

Total Income has decreased from Rs 461.43 crore for April-June quarter last year to Rs 333.92 crore for the quarter ended June 30, 2009.

The average oil price realisation in Q1 was USD 60.2 per cent as against USD 125.9 a barrel a year ago. The gas price realisation in Q1 2009-10 was USD 4.0 per thousand cubic feet as opposed to USD 4.3 a last year.

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