Cairn India's fmancial numbers are set to improve significantly with the start of its crudeoil production from the Mangala field in Rajasthan in August 2009. This would also mean a slight cut in India's petroleum, oil and lubricant (POL) imports, which augurs well for the country in improving the balance of payments as about a gigantic 26% of the total imports comprise crude oil.
Crude oil will be initially transported by Cairn India by trucks to the Gujarat coast and then shipped to refineries MRPL and HPCL. Crude oil will also be sold to IOC by injecting it into its existing pipeline network in Gujarat.
The Mangala field production of 30,000 barrels of oil per day (bopd) is the first train of the four processing trains of the total nameplate capacity of 2,05,000 bopd for the Rajasthan block. The second train of 50,000 bopd is to be completed end 2009. The third 50,000-bopd capacity train will commence by the first half of fiscal ended March 20 I 0 (FY 20 I 0) along with the Mangala field ramping up to its full capacity to 1,25,000 bopd. The plateau production of 1,75,000 bopd from Mangala, Bhagyam and Aishwaryia (MBA) in the Rajasthan block will be achieved with the fourth 75,000-bopd capacity train to commence in 20 II.
A plateau production could mean additional revenue ofRs 18000-20000 crore per annum at current Brent crude prices of approximately US$ 65 per barrel. The government of India has nominated MRPL, roc and HPCL for the offtake of initial crude quantities from the Rajasthan block in FY 2010 and FY'2011. The pricing of the Rajasthan crude represents an approximate 12% discount to Brent on the basis of prices prevailing in the six months to June 2009.
The peak output of 1,75,000 bopd represents 6%-7% of the total current crude oil consumption of India. India currently imports more than 20,00,000 bopd and produces approximately 7,00,000 bopd. Ofthis, about 50,000 bopd come from the Cairn India-operated Ravva field on the east coast of India. This means the company's total crude production could form 30% of India's total crude production.
II
Cairn India and its joint venture (N) partner ONGC have 3, III sq km under long-term contract for exploration on the Rajasthan licence. The main field development area covers 1,859 sq km. The Bhagyam and Kameshwari development areas cover 430 sq km and 822 sq km, respectively. The company is the operator of the Rajasthan block, with 70% participating interest. The MBA fields have proven plus probable (2P) gross reserve and resources of 685 million barrels of oil equivalent (mmboe), with a further 300 mmboe of enhanced oil recovery (EOR) potential, classified as contingent resource.
Of its two producing assets, the average gross production from Cairn India's Ravva field was 44,954 boepd and from Cambay field 14,506 boepd in QI of FY 2010. Thus, the gross operated production was 59,461 boepd. The company has 40% participating interest in Cambay basin and 22.5% in the Ravva field. So the working interest production available to Cairn India is 15,917 boepd.
Cairn India is constructing a 600-km insulated and heated pipeline to export crude oil from Barmer, Rajasthan, to Salaya, Gujarat. This is expected to be completed by end of 2009. The cost of transportation of Rajasthan crude is expected to be US$ 7-US$ 10 per barrel, including US$ 3-US$ 4 per barrel shipping cost and US$ 6-US$ 7 per barrel of
trucking cost. Trucking would be primarily required till the commissioning of the pipeline. Subsequently, cost of crude transportation will significantly reduce to US$ 1.5 per barrel through the commissioning of the pipeline.
Also, Cairn India is planning early application of chemical flooding EOR in the MBA fields to increase the overall recovery from the fields, extend the crude-oil production plateau periods, reduce water production, and potentially increase crudeoil production. The current assessment of the EOR resource base is more than 300 million barrels of incremental recoverable oil from the MBA fields.
At present, Cairn India has exploration interests in 13 blocks held across India and Sri Lanka, nine of which are operated by the company. These blocks are located in the Krishna-Godavari basin in Andhra Pradesh, the Palar basin in Tamil Nadu, the KeralaKonkan basin, the Cambay basin in Gujarat, the Gujarat-Saurashtra basin, the Barmer basin in Rajasthan, the Indus basin in Rajasthan, the Vindhyan basin in Rajasthan, the Ganga Valley basin in Uttar Pradesh, and the Mannar basin off Sri Lanka. Any further discovery in these blocks will add value to the company. And the road does not end here. India has 3.2 million sq km of sed imentary basin, which the government plans to explore as per the New Exploration Licensing Policy policy.
Cairn India is not expected to share the under-recovery burden (due to sale ofpetrol, and diesel at government-nominated prices) unlike upstream companies or downstream oil marketing companies. The size and scope of the Rajasthan project has substantially increased since the original Mangala discovery in 2004, when peak production was originally forecast at 1,00,000 bopd. The facilities at the Mangala processing terminal will include the phased construction of four processing trains with a production capacity of 2,05,000 bopd, with scope for expansion. As a result, Cairn India's turnover and profitability are set to surge from the current quarter ending September 2009.
Crude oil will be initially transported by Cairn India by trucks to the Gujarat coast and then shipped to refineries MRPL and HPCL. Crude oil will also be sold to IOC by injecting it into its existing pipeline network in Gujarat.
The Mangala field production of 30,000 barrels of oil per day (bopd) is the first train of the four processing trains of the total nameplate capacity of 2,05,000 bopd for the Rajasthan block. The second train of 50,000 bopd is to be completed end 2009. The third 50,000-bopd capacity train will commence by the first half of fiscal ended March 20 I 0 (FY 20 I 0) along with the Mangala field ramping up to its full capacity to 1,25,000 bopd. The plateau production of 1,75,000 bopd from Mangala, Bhagyam and Aishwaryia (MBA) in the Rajasthan block will be achieved with the fourth 75,000-bopd capacity train to commence in 20 II.
A plateau production could mean additional revenue ofRs 18000-20000 crore per annum at current Brent crude prices of approximately US$ 65 per barrel. The government of India has nominated MRPL, roc and HPCL for the offtake of initial crude quantities from the Rajasthan block in FY 2010 and FY'2011. The pricing of the Rajasthan crude represents an approximate 12% discount to Brent on the basis of prices prevailing in the six months to June 2009.
The peak output of 1,75,000 bopd represents 6%-7% of the total current crude oil consumption of India. India currently imports more than 20,00,000 bopd and produces approximately 7,00,000 bopd. Ofthis, about 50,000 bopd come from the Cairn India-operated Ravva field on the east coast of India. This means the company's total crude production could form 30% of India's total crude production.
II
Cairn India and its joint venture (N) partner ONGC have 3, III sq km under long-term contract for exploration on the Rajasthan licence. The main field development area covers 1,859 sq km. The Bhagyam and Kameshwari development areas cover 430 sq km and 822 sq km, respectively. The company is the operator of the Rajasthan block, with 70% participating interest. The MBA fields have proven plus probable (2P) gross reserve and resources of 685 million barrels of oil equivalent (mmboe), with a further 300 mmboe of enhanced oil recovery (EOR) potential, classified as contingent resource.
Of its two producing assets, the average gross production from Cairn India's Ravva field was 44,954 boepd and from Cambay field 14,506 boepd in QI of FY 2010. Thus, the gross operated production was 59,461 boepd. The company has 40% participating interest in Cambay basin and 22.5% in the Ravva field. So the working interest production available to Cairn India is 15,917 boepd.
Cairn India is constructing a 600-km insulated and heated pipeline to export crude oil from Barmer, Rajasthan, to Salaya, Gujarat. This is expected to be completed by end of 2009. The cost of transportation of Rajasthan crude is expected to be US$ 7-US$ 10 per barrel, including US$ 3-US$ 4 per barrel shipping cost and US$ 6-US$ 7 per barrel of
trucking cost. Trucking would be primarily required till the commissioning of the pipeline. Subsequently, cost of crude transportation will significantly reduce to US$ 1.5 per barrel through the commissioning of the pipeline.
Also, Cairn India is planning early application of chemical flooding EOR in the MBA fields to increase the overall recovery from the fields, extend the crude-oil production plateau periods, reduce water production, and potentially increase crudeoil production. The current assessment of the EOR resource base is more than 300 million barrels of incremental recoverable oil from the MBA fields.
At present, Cairn India has exploration interests in 13 blocks held across India and Sri Lanka, nine of which are operated by the company. These blocks are located in the Krishna-Godavari basin in Andhra Pradesh, the Palar basin in Tamil Nadu, the KeralaKonkan basin, the Cambay basin in Gujarat, the Gujarat-Saurashtra basin, the Barmer basin in Rajasthan, the Indus basin in Rajasthan, the Vindhyan basin in Rajasthan, the Ganga Valley basin in Uttar Pradesh, and the Mannar basin off Sri Lanka. Any further discovery in these blocks will add value to the company. And the road does not end here. India has 3.2 million sq km of sed imentary basin, which the government plans to explore as per the New Exploration Licensing Policy policy.
Cairn India is not expected to share the under-recovery burden (due to sale ofpetrol, and diesel at government-nominated prices) unlike upstream companies or downstream oil marketing companies. The size and scope of the Rajasthan project has substantially increased since the original Mangala discovery in 2004, when peak production was originally forecast at 1,00,000 bopd. The facilities at the Mangala processing terminal will include the phased construction of four processing trains with a production capacity of 2,05,000 bopd, with scope for expansion. As a result, Cairn India's turnover and profitability are set to surge from the current quarter ending September 2009.
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