Cairn to begin gas production from Rajasthan by March-end

After giving the nation a massive oil discovery, Cairn India is now ready to begin natural gas production from its prolific Rajasthan block and has sought government approvals to begin sale to consumers by month end.

Cairn currently produces small volumes of natural gas along with crude oil from the fields in the Barmer basin block. The gas produced in used for power generation for internal consumption.

It, however, sees the resource base supporting commercial production of about 1 million standard cubic metres per day.

Anil Agarwal, Executive Chairman of Vedanta Resources, which owns majority stake in Cairn India, has written to Oil Minister M Veerappa Moily saying the company "will be ready to achieve sale of natural gas from the block in March 2013."

Cairn and its partner Oil & Natural Gas Corp (ONGC) "have been working towards ensuring development and commercial production of the natural gas resources in the block and have achieved substantial progress," he said.

Gas sales, he said, would begin upon "approval of price and gas allocation from Ministry of Petroleum and Natural Gas as per Gas Utilisation Policy.

The company has already sent a letter seeking approval of a price for the gas to the ministry on January 30, he said.

Agarwal invited Moily to the fields to inaugurate the sale of natural gas from the Rajasthan block.

Sources said Cairn is installing equipment to remove carbon-dioxide (CO2) from the gas before it is sold to consumers like power plants.

The company currently produces about 170,000 barrels per day of crude oil from Mangala and Bhagyam oilfields in the Rajasthan block. Mangala and Bhagyam are the biggest among the 25 oil and gas finds Cairn has made in the desserts of Rajasthan.

Aishwariya, the third biggest field, too is ready to begin production and will contribute about 10,000 bpd at peak.

Agarwal said the block had potential to reach 300,000 bpd of crude oil production besides holding substantial natural gas resources.

Cairn is seeking single window clearance for the Rajasthan project and plans to submit one integrated field development plan for all the finds instead of submitting separate development plans for different discoveries.

Also, it wants work programme and investment budget to be approved for a rolling three years to provide continuity. Currently, the government approves yearly work programme and budget.