You are here

Cairn India outlines big E&P plans

12th August 2013

The chairman of Cairn India Ltd highlights the company’s development over the past year, its rising stake in India’s total oil production, and offers us a peak of a major exploration programme under development which will see the company do more intensive offshore drilling

Cairn India outlines big E&P plans
Cairn India’s exploration programme aims to further increase India’s oil and gas production for the long term

In the past 12 months, Cairn India has consolidated its position as one of the world’s largest producing independent exploration companies with a rising production profile and an established exploration programme positioned to further increase India’s oil and gas production for the long term.

 

This exploration programme, which will be fully funded from Cairn India’s own cash resources and target a gross recoverable risked prospective resource of 530 million barrels of oil equivalent (mmboe) will, when successful, help reduce India's dependence on oil imports, which currently stand at 75 per cent of the country’s total oil usage. Cairn India is already a major producer domestically, operating 25 per cent of the country’s oil production.

 

This is set against the backdrop of a global energy landscape that continues to shift, in particular the increasing emergence of shale gas in the US. This is leading the US to become less dependent on foreign imports for its own needs. Whilst in the future, US shale gas is likely to make its way into the Indian energy mix, it remains a highly energy and capital-intensive process, even in today’s relatively high oil price environment. In this context, the stable, low cost domestic production that Cairn India offers is critical for the country’s energy requirements. As one of the lowest cost producers in the world, we continue to play a key role in helping India meet its energy needs.

 

Cairn India is at a major inflection point in its corporate development. From our well established and highly cash generative production base, the company is now embarking on a landmark exploration programme of its Indian asset base. This has the potential to transform Cairn India’s already sizeable production profile and be a major economic driver for the country. The aggressive exploration and fast-track development is designed to bring new fields into production in a region where Cairn India has already discovered around 1.3 billion boe of gross proved and probable reserves and resources but has drilled only a part of its acreage.

 

For example, the Aishwariya field was successfully brought on-stream, and is now our fifth producing field on our world-class Rajasthan block. This played a part in the company reporting another year of record production with daily output at over 205,000 barrels of oil equivalent. This achievement, delivered at one of the lowest costs per barrel in the industry, is a credit to the entire Cairn India team. The commencement of gas sales from Rajasthan was another key milestone.

 

Even as Cairn India is leading the way in opening up the country’s oil and gas reserves, it makes a significant gross contribution to the exchequer – approximately USD 3.6bn for fiscal year 2013. Similarly, at a regional level, over the past FY the company has made a multitude of positive contributions in the regions in which we operate, strengthening the local economies and supporting the communities.

 

Exploration has been, and will continue to be, central to our growth plans. We appreciate the government of India’s support and for granting us policy clarity to continue exploring in Rajasthan as we strive to realise the basin’s full potential. Across Cairn India’s portfolio, exploration potential abounds, both in our blocks in India as well as in our more recent international entries of Sri Lanka and South Africa.

 

In addition to the government of India, I would also like to thank the state and private companies we work so closely with and with whom we enjoy mutually beneficial partnerships.

 

For FY2013 we reported record financial results and are continuing with our dividend payout policy of around 20 per cent of annual consolidated net profits.

 

We are fortunate to have been able to attract the talent we see today in the company, across all disciplines and at all levels and I thank all Cairn India employees for their dedication in making Cairn India the company it is today.

 

We are committed to ensuring your company is a safe place to work and are pleased to be amongst the top 10 global E&P companies in Health, Safety and Environment perspective.

 

Cairn India has an exciting future ahead. We have a well-balanced portfolio of exploration, development and producing assets and a clear plan, which will see us aggressively pursue exploration and development opportunities in the months and years ahead, funded by our strong production base and harnessed by the on-going application of innovative technologies.

 

This programme has the potential to not only radically change India’s oil production profile but also the size of the company and its presence in the global oil and gas space.

 

This article was written by Navin Agarwal, chairman, Cairn India Ltd.