Cairn India to invest Rs 10,000 crore, aims to raise daily output to 5L barrels

 BARMER: Business magnate Anil Agarwal aims to raise Cairn India's crude oil output to 500,000 barrels per day (bpd), or 25 million tonnes a year, surpassing the annual production of state-run Oil and Natural Gas Corp (ONGC). But he wants the government to unwind the maze of controls and is happy to place a government director on the private firm's board.

Cairn India, which was acquired by Vedanta Group after a series of regulatory hurdles, is already producing 175,000 barrels per day, which account for about a quarter of India's production. The company produces the bulk of its oil from the Rajasthan block, where it has also started producing natural gas.

"We are looking at producing 5 lakh bpd of crude in the next few years as we have enough oil in the ground. We are targetting 3 lakh bpd of crude (in the near future)," Agarwal said on the sidelines of an event to mark the start of gas sales from the Rajasthan block. Agarwal added that
Cairn IndiaBSE 1.60 % is looking at investing of Rs 10,000 crore for exploration and production in the next couple of years.

It will drill 100 exploration and appraisal wells at an investment of Rs 3,000 crore. Cairn India has made 25 discoveries in the 3,100 sq km Rajasthan block and puts its potential at 7.3 billion barrels of oil equivalent.

Agarwal wants lesser state intervention in the country's oil and gas sector. "The aviation sector is being allowed to add fleet without consulting the government. Similarly, we should also have the liberty to add a rig without a lengthy process. Ministry of petroleum & natural gas and ONGCBSE 3.94 % can appoint a board member in the company so that we can be faster in executing the project," said Agarwal.

ONGC is 30% partner in Cairn India's Rajasthan block, which it acquired from Shell in 2002. The first discovery was announced in 2004 in the Mangala field.

Agarwal also wants the government to return acreages which Cairn India had surrendered in the past. "Earlier, we had 11,000 sq km to explore. We had to surrender vast unexplored land to the government. Now, we are considering withdrawing that letter to explore more area," said Agarwal.

He said the exploration should be a priority for India as it would help in energy security and saving foreign exchange. "We can produce crude for $4-5 per barrel as against $120 per barrel of imported crude, which is a waste of foreign currency. India is a highly unexplored geography for crude and it can have 10-20 assets like Barmer.

The country has only three major entities in the exploration business — the government, Cairn India and Reliance. India needs 10-15 good companies to produce 50% of its crude requirements locally." He added that unfortunately India is importing everything despite having iron, coal and crude reserves as we have explored just 20% of the total potential.

Pointing at the growth of Hindustan Zinc, Agarwal said that he was advised that the company won't be able to produce more than 1.5 lakh tonnes and he should not acquire it. "Today,
Hindustan ZincBSE 0.40 % is producing 13-14 lakh tonnes of products without even changing the management. We have reserves for the next 40 years to produce."