In an interview published on the company website, Gammell said, 'We have had a substantial increase in our reserve base in Rajasthan. I think it's natural to provide more autonomy for the Indian business, to have the management team in India drive that business forward.'

'We have a really exciting, growing resource base in Rajasthan. We have an emerging market in India that is very much energy hungry and we see it as a natural progression to partially float the Indian part of our business in India', he added.

The IPO move follows an attempt to sell the oil assets to Indian oil companies. Last month the company management had indicated that they are willing to sell the assets for an appropriate price.

Discussions were reportedly held between Cairn Energy and ONGC regarding the sale of assets. However, the two parties could not agree on the price as Cairn was reportedly expecting around $3.5 billion while ONGC was not willing to offer more than $2.2 billion.

Gammell denied that the IPO would be a prelude to selling the whole of its Indian operations. He said discussions were held with ONGC, without revealing the nature of those discussions. ONGC management had indicated last week that the company is considering Cairn's assets for a possible acquisition.

Cairn Energy struck gold when it discovered India's largest oil find in more than two decades in Rajasthan. These blocks were acquired from oil giant Shell, which failed to discover any significant finds after extensive exploration.

Today Cairn also raised the estimated in-place reserves in the Rajasthan block to 3.5 billion barrels from the earlier estimate of 2.5 billion barrels. Recoverable reserves have also been raised to nearly 800 million barrels. Gammell said the recoverable reserves have the potential to go up to even 1 billion barrels.

Production from the Rajasthan field is expected to start from the year 2008. But the company needs to make significant investments, up to an estimated $800 million, in developing the field and setting up production facilities.

Besides the Rajasthan oil block, the company is the operator for a natural gas block in the Cambay Basin. Cairn also holds a 22 per cent stake in the Ravva oil field which produces around 50,000 barrels of oil per day.

ONGC is a partner in the fields operated by Cairn and holds a 30 per cent stake in the Rajasthan block. The two companies are also jointly considering a well-head refinery in Rajasthan at a cost of around Rs8,000 crore.