Will wrap up expansion this month: Cairn Oil & Gas Deputy CEO Prachur Sah

Cairn Oil & Gas is looking to complete the process of ramping up its crude oil and gas production by March-end. These projects were hit by the lockdown last year.  

“Two or two and a half years ago, we started a major expansion process, which was curtailed to an extent by Covid-19. But, we managed to overcome that and we are finishing most of these projects. We have completed some of them in the past couple of months and we will be done with most of them by the end of March,” Prachur Sah, deputy chief executive officer (CEO) of Cairn Oil & Gas told Business Standard. 

Cairn Oil & Gas is a unit of Anil Agarwal-controlled Vedanta group.

Currently, Cairn Oil & Gas is driving production from the Rajasthan asset and the offshore asset. “We have a total of five assets that we are operating in and have 51 blocks from the Open Acreage Licensing Policy (OALP) bid rounds,” Sah said.

Commenting on the ramping up of production, Sah said, “In a mature asset, production is expected to decline. However, these investments will ensure that we will not only manage the decline but grow the production. So, for Cairn the production in the past six to eight months was 160,000-165,000 barrels. Now, the production is gradually increasing. This month, we have already increased the production to 170,000 barrels, including gas. And, we expect to raise it up to 180,000-185,000 barrels by mid-March.”

Sah said the company’s cost of production was competitive. “Production cost is hovering anywhere between $6 and $8 a barrel which is quite competitive if you look globally. I think we will remain there with the enhanced recovery projects. The recovery projects always cost a little bit higher and incur more cost. We believe if the incentive goes to the government and the government helps us on the exploration side, we will remain very competitive in terms of delivering these projects,” he added.

Commenting on the costs incurred for enhancing production from assets and the need for fiscal incentive, Sah said, “Our operating expenditure will remain close to $8 a barrel and if you include the exploration and the development spend, we will be at $20 a barrel. We need the government to help us on the incentives side, on the enhanced recovery because it is more capital intensive but will still remain quite competitive.”

According to Sah, the group has undertaken multiple cost optimisation and digitisation measures. “If I look at Vedanta wide view, we are probably talking about an annualised number of $120 - 130 plus million. The adoption of Model Predictive Control has led to an increased production of 500-1000 barrels of oil per day (BOPD). While the BOPD number may look that big, the investment that we made to bring in those additional barrels is much lesser.”

“On the cost side, it is anywhere across different initiatives that may be close to a dollar per barrel that we could talk of. At the Cairn level, we are probably talking $30-35 million on an annualised basis. And at the Vedanta level, it is about $120 million in terms of digital-driven value,” Sah added.