Cairn India begins production at Mangala

NEW DELHI, Aug. 31 (UPI) -- Cairn India Ltd. began production Saturday at Mangala in the Rajasthan region's Barmer field, one of the biggest onshore oil discoveries in India in more than 20 years.

"The crude oil production from Barmer Field is a significant step towards achieving energy security for our country," Petroleum Minister Murli Deora said Saturday at the inauguration.

India, Asia's third-largest oil consumer, currently imports more than 2 million barrels of oil per day, accounting for more than 75 percent of its crude oil requirements.

Mangala, along with Cairn's fields at Bhagyam and Aishwariya, is expected to reach peak production of about 175,000 barrels of oil per day over next few years.

"At its peak, the crude production from this block will be about 20 percent of the current crude oil production of the country, and will save around 7 percent of the crude oil import bill and reduce import dependence," Deora said.

"This will go a long way to meeting the country's energy needs," Maitali Ramkumar, a New Delhi-based analyst with Asian Markets Securities Pvt. told Bloomberg. "We think crude prices will rise and that will only benefit Cairn," he said.

Cairn India, a unit of London-listed Cairn Energy, can sell crude at market prices, unlike state-run Oil & Natural Gas Corp., which is required to give discounts to state refiners on the oil it produces. The company holds material exploration and production positions in 13 blocks in west and east India along with new exploration rights elsewhere in India and Sri Lanka.

Deora noted that when India gained independence in 1947, it had only one oil-producing field, in Assam, and the Indian Basin was thought to be hydrocarbon barren. With the discovery of the Mumbai High Field in the 1970s and later the KG Basin, one of the largest gas finds in India, and the discovery of crude oil in Barmer Field, he said, "India has demonstrated that it is rich in hydrocarbon reserves."

"We are committed to intensify our efforts to discover hydrocarbon resources," Deora said.

Deora called attention to the eighth round of bidding launched this month under India's New Exploration Licensing policy and the fourth round of bidding under the Coal Bed Methane policy. Some 70 oil and gas blocks and 10 CBM blocks are on offer.

"We are looking forward to active participation from Indian and international investors," he said.

The Indian government hopes to secure up to $3 billion from this round, which closes Oct. 12, but analysts point out that earlier rounds attracted relatively little interest from overseas players, the Financial Times reports.

The NELP auction has also been hampered by disagreements over pricing issues between Indian moguls Mukesh Ambani of Reliance Industries and his brother Anil of Reliance Natural Resources.