London, Aug 27: Cairn India, a subsidiary of the UK-based Cairn Energy, may produce up to 71 per cent more oil from the Rajasthan field and is close to securing the credit lines that will ensure sufficient funding is in place to start production next year.
The Rajasthan field is the largest oil find in the country after Oil and Natural Gas Corporation's (ONGC) Bombay High discovery in 1974. ONGC holds 30 per cent in the block. Chief Executive Sir Bill Gammell said the company "is on track to deliver crude oil from Rajasthan in the second half of 2009." This is despite his acknowledgment that "recent developments in the financial markets may impact the group's ability to raise the necessary credit facilities to complete work programmes," The Telegraph reported. Cairn expects to foot 1.82 billion dollar of the 2.6 billion dollar bill for developing the field and building a pipeline, with the remainder coming from its partner, India's state oil company ONGC.
Cairn will meet the cost through cash on its balance sheet, which stood at 1.18 billion dollar at the half year, and debt. Last week, Cairn signed a commitment with its five lending banks to increase its 840million dollar facility to 1.4 billion dollar.
The Rajasthan field, which has the potential to provide India with a fifth of its oil production, is thought to contain at least a billion barrels and to be able to produce 175,000 barrels a day at its peak. Assuming an oil price of 100 dollar, it will generate cash of about 3 billion dollar a year.