All set to kick off formal crude oil production from its fields in Rajasthan, Cairn India on Wednesday announced that along with its partner Oil and Natural Gas Corporation (ONGC), it will invest nearly $1.5-1.8 billion more in the prolific oil fields over the next two years.
The Prime Minister, Manmohan Singh, will dedicate to the nation the oil fields and kick off the first production train on August 29. In an interaction with journalists over a conference call, Cairn India CEO and Managing Director Rahul Dhir said the Mangala field would start producing a few thousand barrels of oil a day from August 29 and gradually ramp up the production to around 30,000 barrels per day (bpd).
The Mangala field will hit peak output of 1.25 lakh bpd in the first half of 2010 and together with Bhagyam and Aishwariya, production would top 1.75 lakh bpd in 2011. “Cairn and ONGC have till date spent $2 billion on the Rajasthan block. In 2010 and 2011 or during the next two years, another $1.5-1.8 billion [investment] is planned,” he said.
The two are investing $2.6 billion in developing the Mangala field, the largest oil find in the country in more than two decades, and another $600-700 million on the Bhagyam and Aishwariya fields. Besides close to $1 billion was being spent on laying a pipeline to Gujarat coast to transport the oil to local refineries, he said.
Mr. Dhir said the first oil would be sold to Mangalore Refinery and Petrochemicals Limited (MRPL), a subsidiary of state-run ONGC.
The oil would be trucked to Kandla in Gujarat from where it would be shipped to Mangalore.
The trucking operations, that cost $10-12 a barrel, would continue till the year-end by when the 700 km heated pipeline would be constructed.
Indian Oil Corporation would start buying the Mangala crude oil from the first quarter of 2010, he said. Hindustan Petroleum Corporation Limited (HPCL) is the other refiner nominated by the government to buy Cairn crude.
Mr. Dhir said the finding and development cost came to $3.5 a barrel and another $1 a barrel was the cost of the pipeline. On top of this, operating cost would be $5 a barrel.