Cairn India to invest $2 b in Rajasthan in two years

Barmer: Cairn India, a Vedanta Group Company, on Saturday said it would invest $2 billion in the next two years to develop its Barmer block in Rajasthan.

“In the next couple of years, we are looking at around $2 billion investment. In the next five years, we are looking to drill at least 500 wells a year. The resource base allows production of 300,000 barrels per day ,” said P. Elango, member of the board, Cairn India.

Cairn India, promoted by London-based billionaire Anil Agarwal, said the exit production rate for 2013-14 is expected to be 200,000-215,000 bpd. The block is jointly held by Cairn India, which has 70 per cent stake, and public sector explorer ONGC, which holds the remaining 30 per cent.

In the long-run, output from Barmer may go up to 500,000 bpd and to drill that much oil, nearly Rs 10,000 crore of investments may be poured in, said Anil Agarwal, Executive Chairman, Vedanta Resources.

Gas and crude sales
Cairn India and ONGC on Saturday also announced the commercial sale of natural gas. They said production has started from the Aishwariya field .

“Initial commercial volumes will be about 5 mmscf per day,” Cairn said in a statement. Elango said the Government would nominate buyers for natural gas from the Barmer block.

Veeraapa Moily, Petroleum Minister, said gas would be sold at $5/mBtu.

The block produces about 30 mmscf of gas a day from the Raageshwari deep gas field and the Mangala and Bhagyam fields. The gas produced along with crude oil is used to fire its 48 MW captive power station at its Mangala processing terminal.

At its peak, Aishwariya is expected to add 10,000 barrels of oil per day (bpd) to the current output of 175,000 barrels from the Mangala, Saraswati and Bhagyam fields in the block.

Oil output from the Rajasthan block contributes over 20 per cent to the nation’s oil production. India meets close to 80 per cent of its crude oil requirement through imports.

The block has contributed Rs 19,000 crore (cumulative) to the exchequer in the form of royalty and levies. The field, since it began production in August 2009, has replaced imports of about Rs 50,000 crore.

“Everyday, Cairn India pays a royalty of Rs 15 crore to Rajasthan,” Elango said.

Infrastructure
Elango said the explorer is in talks with the Government of Rajasthan to develop gas infrastructure in the State. “We have formally submitted our expression of interest. The State has a joint venture with GAIL. The new gas can push the project,” he added.