Cairn starts oil production in Rajasthan – Prime Minister dedicates it to the Nation

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29 August 2009

Cairn India has started production from the world class Mangala Field in Rajasthan. Mangala is the largest of 25 discoveries made by Cairn in the Barmer Basin in Block RJ-ON-90/1

The Mangala field was dedicated to the Nation by the Hon’ble Prime Minister of India, Dr. Manmohan Singh, at the Mangala Processing Terminal, Barmer, Rajasthan today in an inauguration ceremony attended by Central and State Government officials.

First oil was evacuated via trucking to the Gujarat coast for onward transport to MRPL, one of the Government nominated buyers, using a heated crude oil tanker. The oil production will gradually ramp up to a peak production of 175,000 barrels of oil per day over the next two years. At this point, oil production from Rajasthan oil fields will account for over 20% of India’s domestic oil production.

Among those present at the event were dignitaries including the Chief Minister of Rajasthan, Shri Ashok Gehlot, the Union Minister for Petroleum and Natural Gas (P&NG), Shri Murli Deora, Minister of State for Petroleum and Natural Gas, Shri Jitin Prasada, the Member of Parliament for Barmer, Shri Harish Chaudhary, the Minister of State for Mines, Environment and Forest, Government of Rajasthan, Shri Ram Lal Jat, Secretary (P&NG), Shri R.S. Pandey, Directorate General of Hydrocarbons , Shri V. K. Sibal and Chairman and Managing Director of ONGC, Shri R.S. Sharma. Cairn was represented by Sir Bill Gammell, Chairman, Cairn India and Shri Rahul Dhir, Managing Director and CEO, Cairn India

Cairn India, the Operator of the Rajasthan block, holds a 70 percent participating interest with ONGC, its joint venture (JV) partner, holding the balance of 30 percent. The JV has already invested approximately USD 2 billion in the Rajasthan project and has plans to invest a further USD 1.8 billion by 2011, making it one of the largest onshore oil and gas projects in India.

Highlights of the Rajasthan project include:

  • The Mangala field was discovered in January 2004 - the largest onshore oil discovery in India in more than 20 years
  • The Mangala, Bhagyam and Aishwariya (MBA) fields have recoverable oil of nearly 1 billion barrels which includes proven plus probable (2P) gross reserves and resources of 685 million barrels of oil equivalent (mmboe) with a further 300 mmboe, or more, of Enhanced Oil Recovery (EOR) potential
  • Initial volumes of crude will be produced through the first processing train which has a capacity of 30,000 barrels and production ramp up will continue until all four processing trains, with a total capacity of 205,000 bopd, are built and installed by 2011
  • The MBA fields, once on peak plateau production of 175,000 bopd, will contribute more than 20% of India’s domestic crude production
  • The Rajasthan resource base has continually grown since the discovery of Mangala in 2004 – a total of 25 discoveries have already been made - the focus being to realise the full potential of the Barmer Basin in the coming years
  • The total acreage under long term contract is 3,111 km2 spread across the districts of Barmer and Jalore
  • The Mangala Processing Terminal (MPT) will act as the hub for processing crude oil from all the Rajasthan fields
  • ~16,000 workers are currently involved in the construction activities -5,000 on the pipeline and 11,000 on the MPT
  • The world’s longest heated and insulated crude oil pipeline is being built by Cairn from the MPT to the Gujarat coast – length of 670 kilometres - giving access to more than 75% of India’s refining capacity – the first phase is targeted for completion by the end of 2009
  • Special heated trucks deployed for evacuation of crude from Mangala Processing Terminal to Gujarat Coast
  • Crude production from the Rajasthan fields will generate revenues of approx Rs. 36,000 crore (US$7.6 billion) in the form of royalties to the State Government of Rajasthan over the life of the project, while the Government of India will earn approximately. Rs. 46,000 crore (US$9.5 billion) as profit petroleum, assuming crude oil prices of US$50 a barrel
  • Employed highly mobile custom built rapid drilling rigs, with compact lay out, which has resulted in savings in land, infrastructure and drilling costs
  • Use of latest drilling and completion technology to create high rate production wells with capacity of up to 10,000 barrels of oil per day

The GoI has nominated MRPL, IOC and HPCL for the initial offtake quantities from the Rajasthan block for the period 2009-10 and 2010-11 and the commercial terms and pricing negotiations have been concluded with IOC and MRPL.
The pricing agreed with MRPL and IOC for the initial volumes of crude from Mangala represent a 10-15% discount to Brent on the basis of prices prevailing for the six months to June 2009. This is subject to GoI approval.

Rahul Dhir, Managing Director and Chief Executive, Cairn India said:

“This is a significant and historic event for both Rajasthan and India as the country's biggest onshore oil discovery for more than two decades is brought on production

Cairn is delighted to have support from the highest levels of the Government of India and it is an honour to have the Mangala field, which will enhance India’s energy supplies, inaugurated by the Hon’ble Prime Minister of India, Dr. Manmohan Singh.

We have worked closely with our partners, including state and local authorities, to ensure that the project is delivered on to time, so as to maximise the benefits to the company and the local Barmer community.

Cairn would like to thank the people of Barmer and Rajasthan and we hope the project will bring further benefits to the economy in the area.”

Sir Bill Gammell, Chairman of Cairn India said:

“This is major milestone and historic moment for the Cairn group.

We are delighted that we have been able to bring this field from discovery to production successfully within five years.

It is a world class development and we would like to thank our partners, ONGC the state and central government along with our contractors who have made this achievement possible. It is a credit to everyone who has worked on the project.

We look upon this as the first step in developing the MBA fields further and continuing to grow our business.”

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