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Cairn begins oil production from Mangala; PM terms it `a new era`

Last Updated: Saturday, August 29, 2009 - 23:58

Barmer: Prime Minister Manmohan
Singh on Saturday inaugurated production from the country`s biggest
oil find in more than two decades and said that India offered
"a very good" climate for foreign investment in the sector.

Speaking at the beginning of oil production from Cairn
India`s on-land Mangala oilfield, he said the historic event
reflected that a "very good climate has been created for
foreign investment."

"I invite investors from all over the world (to invest
in the oil and gas sector) ...The investment climate is
positive. We are committed to facilitating (such investment)
and providing all assistance," he said.

India has offered 70 oil and gas exploration areas and 10
coal bed methane (CBM) blocks -- the largest ever auction of
oil and gas exploration areas in the country -- in the eighth
edition of New Exploration Licensing Policy (NELP).

Singh described the beginning of oil production as the
"beginning of a new era" for India and Rajasthan. The oilfield
will facilitate a more prosperous state and economic

The nation, he said, had made economic progress but to
eliminate poverty, rapid economic growth was needed. And
energy was a necessity for faster economic growth.

The Prime Minister said world-over economic development
has followed oil and gas discoveries and the same will happen
in Rajasthan where newer avenues of employment will be

Cairn India has started production from the Mangala field
-- the largest of 25 discoveries made by Cairn in the Barmer
Basin in Block RJ-ON-90/1. First oil was evacuated via
trucking to the Gujarat coast for onward transport to MRPL,
one of the government-nominated buyers.

The oil production will gradually ramp up to a peak
output of 1,75,000 barrels per day over the next two years. At
this point, oil production from Rajasthan oil fields will
account for over 20 percent of India’s domestic oil output.

Petroleum Minister Murli Deora said the gas discovery in
the Krishna Godavari basin by Reliance Industries and the oil
find in Barmer demonstrated that India is a hydrocarbon rich.

Oil production from Mangala will save around 7 percent
in crude oil import bill, he said.

"Cairn has invested about Rs 10,000 crore in the area.
The total investment in this project will be more than Rs
20,000 crore.

"Central government would get Rs 46,000 crore as
its profit petroleum revenue over the life of the project. The
Government of Rajasthan would get Rs 12,000 crore as royalty
for the first five years of the project," he said.

Cairn India Chairman Bill Gammell said the development of
the oil field in five years from discovery was reflective of
the investor friendly environment in the country.

"... it is once again a clear signal to the rest of the
world that India provides both the opportunity and the
required support to create world-class developments on a
timescale that few could match," he said.

He said five years ago Cairn did not realise the enormous
potential the Mangala field holds.

"(When in 2004) we had made the Mangala discovery, we
knew that it had enormous potential but I do not think at that
time we contemplated the size and scale of the world-class
development that lies before us today," he said.

"When we are on full production, we will account for at
least 20 percent of India’s overall oil production. The
Mangala field is one of 25 discoveries that we have made in
the Barmer basin and I am therefore looking forward to many
long years of production as additional fields are appraised,
developed and tied-in to this world-class infrastructure,"
he said.

Bureau Report

First Published: Saturday, August 29, 2009 - 23:58
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