INDIA BUSINESS WORLD - JULY 2006
THE MONTH THAT WAS...

CAIRN TO POUR $4B INTO RAJASTHAN OILFIELDS

CAIRN Energy kicked off its India story in style, drawing up an ambitious investment plan of around $4 billion for its oilfields in Rajasthan.

The company expects to earn a whopping $40 billion from these oil finds, assuming an oil price of $40-50 a barrel. Oil production from the fields is slated to begin from end 2008. It is estimated that these fields, among the largest onshore blocks, would have 1 billion barrels of recoverable oil. Cairn has already pumped in $450 million risk capital in Rajasthan fields.

The company is going to float an IPO by year-end. A top management team led by Indian professionals is set to run operations here. Incidentally, ONGC was among suitors understood to have been interested in buying Cairn's Indian assets.

Speaking on Cairn's future plans, chairman and CEO Bill Gammell said: “Cairn will participate in NELP-VI. Although I cannot tell you with whom who will align, we are sure that we will participate.”

Bids for NELP-VI are to be put in by September.

Asked to comment on global outlook on oil prices, Mr Gammell said: “I wouldn't want to take a guess but I should think it is expected to be in the region of $50 a barrel in the next 3-5 years frame. And, if you push me to it, I would bet on it reaching $100 a barrel than $30 a barrel.”

Cairn has tied up a $1 billion funding facility with a consortium of 14 banks. It hopes to pay back the debt within 18 months after production of oil begins.