Energy Sector - 2

[Arun_S]

[url="http://beta.profit.ndtv.com/news/show/cairn-india-raises-oil-output-31699"]Cairn India raises oil output[/url]

Raj Kumar Sahu, March 23, 2010 (New Delhi)



After overcoming its niggling start up problems, Cairn India now says it can produce 37 per cent more oil than previously thought from its Barmer oilfield in Rajasthan.

So, will there be ready buyers for this additional output?



Good news for Cairn India seems to be flowing already, as the crude production from Barmer fields started last year and now, after more evaluation, the recoverable reserves seems to have doubled.



The oil explorer has received a shot in the arm after it recently discovered that the potential source of oil and gas from its Rajasthan field was now at 6.5 billion barrels of oil equivalent and recoverable reserves could be doubled to 1.4 billion barrels.



Rahul Dhir, CEO of Cairn India, said, “The reserves estimates has now improved to 4 billion-6.5 billion barrels now. The recovery too will go up to 1.4 billion barrels with per day production of 240,000 bopd.”



Dalal street also cheered the announcement with the stock rising nearly 4 per cent during trade on Tuesday to close 3.75 per cent up at Rs 292.80 in a flattish market.



Once the production reaches 2,40,000 barrels per day, it would ease India's oil import bill by about 2 per cent.



In fact, despite being a heavy waxy crude, Cairn has successfully sold it to private refiners like Reliance, which runs an extremely complex refinery in Gujarat.

“A commitment for 1,43,000 bopd has already been made by various refineries,” said Dhir.



A rising crude output and increasing reserves might be good news for Cairn India.

However, once again the company failed to clarify on the issues related to the cess and royalty payments for the Rajasthan field and of course, its much talked about crude pipeline is still under construction.