Cairn Oil and Gas to Invest $4.6 bln in New Exploration
Cairn Oil and Gas, part of Vedanta Ltd, will invest 300 billion rupees ($4.6 billion) in exploration projects off India's east coast and in the onshore fields of Barmer in the west, its acting CEO said.
The company expects approvals to be in place by the end of October, Sudhir Mathur told Reuters on the sidelines of the India Energy Forum in New Delhi, as Cairn undertakes a fresh investment plan after the extension of its production contract until 2030.
No debt will be raised for the investment, Mathur said, adding that the money will be spent over a period of three to four years.
Cairn Oil and Gas was formerly known as Cairn India (CAIRN.NS) before it merged with Anil Agarwal's Indian mining major Vedanta Ltd. The business received got a shot in the arm in March when the government approved the extension of its production-sharing contract in the Barmer basin in Rajasthan.
The company had said earlier this year that it could invest more in further developing its four main Barmer fields on the condition its production-sharing contract was extended.
The fresh investments are part of the company's plan to produce oil and gas in India beyond 2020, Mathur said.
Cairn will also start drilling for oil and gas in the Krishna-Godawari (KG) basin in the Bay of Bengal by the end of March.
"Difficult to say at this time but we believe it's quite prospective ... We would say anywhere between 250 million to 500 mln barrels of reserves would make it very viable for us," Mathur said.
"The investments include all projects and will start with the $1 billion dollars we have already announced."
The projects, apart from KG basin, include its gas field in the Raageshwari field in Barmer and an enhanced oil recovery (EOR) programme in the Bhagyam and Aishwariya fields. EOR involves chemicals being pumped into ageing fields to help to recov crude oil.
The company is now planning to increase output from its Mangala field in Barmer under a second EOR phase, Mathur said.
Cairn will also announce within a month a technology partner for its Rajasthan block to help to expedite production.
Mathur said that Cairn is keen to partner state-owned explorers such as Oil and Natural Gas Corp or Oil India if the incentives are right.
India's government is working on a proposal to bring private investment into ONGC and Oil India-owned blocks where production has been poor.
Reporting by Promit Mukherjee and Neha Dasgupta
