"We are delighted that production from Mangala (oil field) in Rajasthan is due to commence this week after a government inauguration ceremony," said Bill Gammell, chief executive of Cairn Energy - the parent firm of Cairn India.
Peak output of 1,75,000 barrels per day (8.75 million tonne) will account for close to 25% of India's current oil production. Some industry experts believe that the output may climb to at least 2,05,000 bpd (10.25 million tonne). Cairn said it plans to pump 30,000 bpd initially.
"The significant milestone of first oil production from Rajasthan will soon be achieved, five years after the discovery of the Mangala field," Cairn chairman Norman Murray said. Mangala is the biggest oil discovery made in India in more than two decades after the Gandhar find in Gujarat by Oil and Natural Gas Corporation (ONGC). Rajasthan oilfields will cut India's oil import cost by $6.8 billion, or 7%, Goldman Sachs said.
Cairn said it will initially truck the crude oil to refiners and hopes to complete a pipeline to Gujarat coast by the year-end. Cairn said that negotiations on price for the initial offtake of Rajasthan crude have been concluded with the government nominees -- Indian Oil Corp (IOC) and Mangalore Refinery and Petrochemicals Ltd. The price agreed currently represents a 10 to 15% discount to Brent. The first processing train of 30,000 bpd capacity is ready and the second unit will be ready by the fourth quarter of 2009. The pipeline transporting the crude from deserts of Rajasthan to the Gujarat coast will also be completed by the end of 2009. Train three (50,000 bpd), which will follow Train two, is progressing on target to attain Mangala plateau production of 1,25,000 bpd by the first half of 2010.