British firm to invest one billion dollars in India's oil sector

Jul 3, 2006, 18:15 GMT

New Delhi - The Indian government has granted approval to British oil explorer Cairn Energy Plc for oil exploration in India's western state Rajasthan after it attained a bank facility of one billion dollars, news reports said Monday.

'Obtaining government approval for the Mangala, Aishwariya, Saraswati and Raageshwari fields in Rajasthan and securing finance for the first phase of the development is a significant achievement on the path to first oil,' said Cairn chief executive Bill Gammell.

Approval has been given for Mangala, Aishwariya, Saraswati and Raageshwari fields in Block RJ-ON-90/1, in north-west Rajasthan, said company officials.

Cairn operates this block under a Production Sharing Contract with Oil and Natural Gas Commission of India (ONGC) - with Cairn holding 70% and ONGC having exercised their back in right for 30 per cent share.

Cairn has now made 18 discoveries in the Rajasthan block RJ-ON- 90/1.

The Edinburgh-based will use 850 million dollars of the billion- dollar bank facility to fund Cairn's share of Rajasthan plans, according to company officials.

Cairn recently estimated there were more than 3.5 billion barrels of oil in place in its key Rajasthan exploration block in northwest India, up from about 2.5 billion previously, news reports said.

The Group holds material exploration and production positions in west India, east India and Bangladesh along with new exploration rights in India and Nepal.

India currently imports approximately 2,000,000 barrels of oil per day (bpd). It produces approximately 650,000 bpd itself of which 50,000 bpd comes from the Cairn operated Ravva field on the east coast of India.

The company says it is on track to list its Indian business in Bombay by the end of March 2007.