Cairn to start production from Rajasthan field in 2009

27 August 2008

Mumbai: Cairn India, a subsidiary of the UK-based Cairn Energy, is all set to start production of crude oil at its massive Rajasthan field next year and is close to securing necessary credit lines, company sources said. 

Cairn may produce up to 71 per cent more oil from the Rajasthan field, in which the Oil and Natural Gas Corporation (ONGC) of India holds 30 per cent stake, the sources said.

The Rajasthan field is the largest oil find in the country after ONGC's  Bombay High discovery in 1974. Cairn said it plans to start production from three blocks in the Rajasthan field from the second half of 2009.

ONGC and Cairn have asked the government to benchmark the price to a variety of Indonesian crude oil. The Indonesian crudes are trading at a discount of 5-13 per cent to North Sea Brent crude.

With Brent currently trading at $115 a barrel, the Rajasthan crude may fetch a price of between $100 and $110 per barrel, the source pointed out.
 
Cairn is close to securing credit lines that will ensure sufficient funding to start production, chief executive Sir Bill Gammell said while announcing the company's half-yearly results.

Cairn expects a total expenditure of $2.6 billion for developing a pipeline to transport crude from the field, of which its share will be around $1.82 billion and the remainder coming from partner ONGC.