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Centre’s helping hand heats up Cairn India

June 26, 2007

As per reports, the Central government has agreed to Cairn India’s proposal to lay a pre-heated 580-kilometre (km) pipeline at a cost of $600 million (Rs 2,400 crore) to transport the crude oil from its Barmer oil fields in Rajasthan to Virangam in Gujarat. The cost of laying the pipeline is to be shared between Cairn and Oil and Natural Gas Corporation (ONGC) in a 70:30 ratio, the same as the shareholding in the oil field, laying to rest a contentious issue between the government and Cairn.

Petroleum Minister Murli Deora is expected to announce the decision shortly, reports suggest. With this, a solution will be in place to evacuate the waxy crude oil from Cairn’s Rajasthan oil find, the largest in the country since ONGC’s Bombay High in 1974.

Crude oil from the field will reach a peak production of 1.5 lakh barrels per day (bpd) of oil, which will boost the country’s output by 20% from 6.8 lakh bpd. The area is estimated to have 1 billion barrels of oil. Cairn is confident of delivering 1,50,000 bpd as has been agreed by the government. Cairn had applied to the government to get the pipeline included in the overall field development cost, which will enable it to recover the cost from the revenue earned from selling crude oil. The field is expected to run at peak production for 10 years.

On 10 May 2007, Cairn India said it had made two new discoveries in the Rajasthan block in northern India. The company received a six-month extension from the government for further exploration in the block.

Cairn India reported net loss of Rs 8.54 crore in Q1 March 2007. Sales were Rs 0.50 crore in Q1 March 2007.

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