Cairn secures $1bn financing for its Indian operations

New Delhi: Edinburgh-headquartered Cairn Energy has secured $1bn debt facilities from institutions, including the World Bank and Royal Bank of Scotland, which the company will utilise to install production and processing facilities at its Rajasthan assets.

The debt would be used to develop Mangala, Aishwariya, Saraswati and Raageshwari fields at Block RJ-ON-90/1 in Rajasthan. The company had earlier received final government approval for development plans for the four fields. The first oil is expected in end-2008, a Cairn release said.

"Obtaining government approval for the Mangala, Aishwarya, Saraswati and Raageshwari fields in Rajasthan and securing finance for the first phase of the developments is a significant achievement on the path to first oil," said Sir Bill Gammell, chief executive.

The Cairn release said that the World Bank's International Finance Corp will provide about $ 150 million in the form of a nine-year-loan, while the remaining $ 850 million would be sourced from a dozen commercial banks, including ICICI.

The developments now clear the way for Cairn to proceed with its plans for an initial public offering (IPO) on the Bombay Stock Exchange (BSE), which the company is expected to complete by the end of the first quarter of 2007. The flotation is likely to raise £1bn and more.

The Mangala, Bhagyam and Aishwariya fields are expected to yield combined proven and probable reserves of 514 million barrels of oil, with up to 685 million barrels of crude ultimately flowing if enhanced oil recovery is implemented. Cairn, with 70% stake, as operator and ONGC with 30% are joint partners in the project.