Cairn's Raj oil block has potential to produce 300,000 bpd

Cairn India's prolific Rajasthan oil block has potential to produce 300,000 barrels per day (bpd), a quarter more than the previously projected peak output.

The company, which has been acquired by London-based miner Vedanta Resources, has told the authorities that Mangala and other oilfields in the block can produce 300,000 bpd, subject to regulatory and partner approval.

Sources privy to the development said Mangala, the biggest of the 18 discoveries that Cairn has made in Rajasthan block, can produce 150,000 bpd against current output of 125,000 bpd.

Bhagyam, the second biggest field in the Rajasthan block, can produce 60,000 bpd as opposed to current approved peak output of 40,000 bpd, while Aishwariya can contribute 25,000 bpd compared to 10,000 bpd previously stated.

Other fields can produce 65,000 bpd.

Sources said Bhagyam field is ready to start production, while Aishwariya would begin output in 2012.

Bhagyam start-up as well as the new production targets are contingent upon oil regulator DGH and the oil ministry approvals.

At present, the approved peak output from Rajasthan is just 175,000 bpd -- made up of 125,000 bpd from Mangala, 40,000 bpd from Bhagyam and 10,000 bpd from Aishwariya.

For the new peak, the government needs to approve field development and investment plans along with extension of the exploration over the rest of the block.

Cairn India holds 70% interest in the block and state-owned Oil and Natural Gas Corp (ONGC) the remaining 30%.

Cairn India CEO and Managing Director Rahul Dhir had yesterday in a conference call, after Vedanta announced completion of the $8.67 billion takeover, stated that the production from Bhagyam is ready to start subject to regulatory approvals.

He had stated that Rajasthan block can reach 240,000 bpd by the end of 2012.

The start of output from Bhagyam is awaiting ONGC and Management Committee approval. Management Committee is an oversight panel comprising of representatives from the partners, oil ministry and the DGH.

Sources said oil ministry had not approved Bhagyam development since Vedanta announced acquisition of Cairn India.

Cairn and Vedanta have agreed to the government conditions on paying royalty and cess on Rajasthan block to get approval for the transaction. Since then the deal has closed and Cairn India now hopes to get necessary approvals for output boost, they said.