The Hindu Business Line : Cairn Energy to float IPO by March

The Edinburgh-based Cairn Energy Plc is firm on its India operations and will float an initial public offering for its Indian business by March-April 2007. On Tuesday, it signed a $ 1-billion banking facility to fund its Rajasthan oil field development plan.

Speaking to newspersons at the sidelines of the inward investment signing ceremony here, Sir Bill Gammell, Chief Executive of Cairn Energy, said the company plans to repay $1-billion debt raised for its oilfields by 2010, within 18 months of starting oil commercial production in Rajasthan.

``What we calculated is that the money we raised should be repaid pretty fast,'' he said. The loan repayment is based on earning $40-50 a barrel. Cairn plans to spend a few $100 million more on developing the four fields in Rajasthan. It plans to spend a total of $4 billion of which it would spend about $2 billion on field development and $2 billion on operations.

Cairn has already announced plans to spend $1 billion to help drive exploration plans for its Rajasthan block, which has 3.5 billion barrels of oil in place as per latest estimates. Cairn holds 70 per cent share in the Mangala, Aishwariya, Saraswati and Raageshwari fields and Oil and Natural Gas Corporation (ONGC) holds 30 per cent stake.

Of the $1 billion, about $150 million was provided by World Bank's International Finance Corp in the form of a nine-year loan, while the remaining $850 million came from other commercial banks, including ICICI Bank UK Ltd. The loan would be used to develop Mangala, Aishwariya, Saraswati and Raageshwari fields at Block RJ-ON-90/1 in Rajasthan.

Mangala field

Cairn plans to bring Mangala field on stream by fourth quarter of 2008, followed by Bhagyam and Aishwariya a year later. The first commercial production from the Saraswati and Raageshwari fields is planned in the last quarter of 2006.

The company also received final approval from the Government for the development plans for the four fields. The Mangala, Bhagyam and Aishwariya fields are expected to yield combined proven and probable reserves of 514 million barrels of oil with up to 685 million barrels of crude ultimately flowing if enhanced oil recovery is implemented.

Cairn said under the terms of the production sharing contract the construction of the export system is the responsibility of the Government through its nominated buyer, MRPL, a subsidiary of ONGC. Facilities and engineering design for Mangala is ongoing with a specialist team from Cairn working alongside the contractors, Mustang, in Houston, the company release said.