Cairn India to invest $100m to explore oil
First barrel by 2010 - Fowzie:
By Surekha Galagoda
[email protected]
Cairn India Ltd who bid for one block in Mannar will invest US$100 mn
to explore oil. They will start work within the next six months and
Petroleum Resource Minister A. H. M. Fowzie is optimistic of getting the
first barrel of oil by 2010.
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Cairn India Chairman Sundeep Bhandari and Executive Director/CFO
Indrajit Banerjee presents the documents to President Mahinda
Rajapaksa. Prime Minister Ratnasiri Wickramanayake and Petroleum
and Petroleum Resource Minister A. H. M. Fowzie are also in the
picture. |
Speaking to the media after signing the agreement with Cairn India,
the Minister said that they called for tenders for three blocks but only
bids of one block were evaluated and the tender was offered to the best
bidder after evaluation.
The Minister assured that no amendments were done to the agreement
and said that the agreement was carefully analysed to ensure that the
country gets the best deal.
He said that initially Cairn will give us 10% as royalty but as time
goes by the royalty will increase.
According to calculations it will be 60% after five years but the
timeframe may reduce as the price of oil is increasing by the day. As
time goes by the profit received by the Government will increase, said
Director General Petroleum Resource Development Secretariat, Neil De
Silva.
The Minister said the country’s daily requirement of oil is 80,000
barrels and this is a lot of money but once we get the oil we can save
the large amount of money that goes out of the country on oil imports.
It is a risky business as nobody knows whether there will be oil or
not. Therefore, the wells have to be explored.In India bids were called
for 165 blocks and there was oil in only 10 blocks, said the Minister.
Executive Director and CFO Cairn India Indrajit Banerjee said that
Cairn has been in South Asia for more than a decade and have developed a
good understanding of the regional geology.
The company has made over 40 oil and gas discoveries in India
including the famous and world-class Mangala discovery onshore in the
deserts of Rajasthan in North West India. He said that oil and gas
exploration is a risky business as success is not always guaranteed.
Cairn India listed in the Bombay Stock Exchange is now an autonomous
Indian company with a market capitalisation of over US$11 bln and is a
Top 25 company in India and Cairn Energy Plc of Scotland is a majority
shareholder.
The company operates two processing plants, 11 offshore platforms,
200 kilometers of sub sea pipelines and has exploration interests in 14
blocks across India with a net operated production of approximately
75,000 barrels of oil and gas.
Banerjee said that they are in the process of developing the
Rajasthan project and are investing $1.8 bln during 2008 and 2009. He
said that the company’s approach has been engineering - led with
innovative application of cutting edge technologies across its assets.
It has a proven track record of delivering development projects
quickly and at low cost as well as being a low cost operator.
Chairman, Corporate Advisory Board - Cairn India Sundeep Bhandari
said that they will not purchase the rigs but will hire them as and when
needed.
Minister Fowzie said that the remaining blocks will also be given in
the near future.
According to industry sources the exploration process will take 3-4
years while developing the oil wells to see the commercial viability
will take another 3-4 years. |
