Cairn India may supply gas to Gujrat fertilizer companies from Saturday

NEW DELHI: Cairn IndiaBSE 0.97 %, the operator of India's biggest onshore oilfield in Rajasthan, will start commercial sale of gas from the block to fertiliser firms in Gujarat from this month, government and industry officials said. The sale is expected to start from Saturday after a formal announcement by oil ministerVeerappa Moily, officials said. 

Cairn is expected to get about $5 a unit price for the gas, which is the prevailing rate charged by state oil firms to consumers in Rajasthan and south Gujarat, an oil ministry official said requesting anonymity. "Initial sale will be limited to 5 million standard cubic feet per day. But, we have identified gas prospects in the block, which will enhance gas output significantly in near future," said a senior executive of Cairn India, who did not wish to be named. 

"Cairn has the infrastructure ready. We have eight-inch diameter gas pipeline from Barmer to Jamnagar that will carry gas," the executive said. 

The company plans to spend about $600 million to drill about 100 exploration wells in the prolific Rajasthan block to augment oil and gas production. 

The block's current output is about 170,000 barrels of oil per day and small quantity of gas sufficient to generate 32-mw power for captive consumption, the executive said. At present, gas produced from the block is also used to heat Cairn's 700 km crude oil pipeline to reduce viscosity of the waxy crude and make it flowing. 

Cairn, which has recently received government's approval to continue exploring the block, is making all efforts to expeditiously raise the output to 300,000 barrels per day in two-three years. 

The company is set to deploy two additional rigs in Rajasthan by May and it is in discussion with service provider Weatherford to hire these rigs for 18 months, another executive of Cairn said. Already two rigs are deployed and drilling of the first exploration well was commenced about a month ago, they added. 

Company's focus is to raise the block output to 200,000-215,000 barrels per day by the end of the 2013-14, executives working in the block said. 
ONGCBSE -0.77 % is 30% partner of Cairn in the Rajasthan block.