UK-based Cairn Energy has announced its third major oil strike in Rajasthan from the same block. The latest discovery could potentially contain 400 million barrels of crude. The total quantity of crude oil in Cairn's three discoveries in the past four months could be as high as 2 billion barrels.
According to Mr Allen Linn, country head ( India ), "It is difficult to assess the recoverable oil at this stage. Based on similar reserves elsewhere, the recoverable oil could be 20% of the total reserves." For the three discoveries put together, recoverable oil could be anywhere from 240 million to 400 million barrels.
The crude from the latest strike is of higher density than that of earlier finds. However, this strike was 250 metres below the crest of the oil-bearing structure. Lighter crude is likely to be found closer to the top of the structure. Commercial production, though, may take a while. The environmental and other government clearances may take up to a year. Production activity can start only after these have been obtained. Commercial production from the reserves would take three years at the earliest, said Mr Linn.
The three discoveries are in the block that Cairn purchased from Shell two years ago. Ironically, Shell is facing trouble over reserve estimates. The three discoveries have taken Cairn's stock price from 350 pence per share at the beginning of the year to over
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