Oil India Plans to Invest $4B in Five Years to Raise Output

- Oil India Plans to Invest $4B in Five Years to Raise Output

Tuesday, September 13, 2011
Dow Jones Newswires
NEW DELHI
by Rakesh Sharma

Oil India plans to raise its capital expenditure 73% to about INR190 billion ($4 billion) in the five years starting April 2012 as the state-run explorer seeks to sharply raise oil and gas production, its finance director said.

"We are stepping up exploration and development of our blocks in India and overseas," T.K. Ananth Kumar told Dow Jones Newswires late Monday. "We are also seeking producing assets, so we have raised our capital expenditure plans."

The company's capital expenditure in the five years ending March 2012 is likely to be about INR110 billion. It accounted for a 10th of India's total oil output of 754,000 barrels a day and 4.5% of total gas output of 52.22 billion cubic meters in the last financial year. Kumar didn't say how much the company is aiming to produce.

Oil India will mainly fund its investments through internal accruals, but may raise debt, he said.

The company, which was listed on local stock exchanges in September 2009, has cash reserves of INR130 billion, he added.

Oil India and its bigger state-run rival Oil & Natural Gas Corp. need to boost capital spending to bring new fields into production amid falling output at their aging fields. India, which imports about four-fifths of its crude oil requirements, is encouraging explorers to ramp up exploration and production to meet surging demand for energy in the world's second-fastest growing major economy.

"We have been witnessing an increase in capex by oil and gas explorers in India for the past several years as energy security is a focus. This sort of high capex is quite achievable by Oil India considering they have more than INR120 billion of cash and have been generating a cash flow of about INR40 billion per year," Alok Deshpande, analyst with Elara Securities Ltd., said.

Oil India is seeking to acquire producing oil and gas assets in Australia, Russia, Kazakhstan and Canada, Kumar said.

"We have shifted our focus to acquiring producing assets, rather than going for exploration blocks, as we already have our hands full with existing exploratory blocks. Also, we have enough cash in hand and that would be the best use of it," Kumar said.

Oil India is in talks with French explorer Etablissements Maurel et Prom to buy a stake in its Gabon assets and plans to close the deal by March, Mint newspaper reported Monday. Kumar declined to comment on the report.

Copyright (c) 2011 Dow Jones & Company, Inc.

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Jubilant Reports Testing Results for Kharsang Field in India

- Jubilant Reports Testing Results for Kharsang Field in India

Monday, September 05, 2011
Jubilant Energy N.V.

Jubilant announced the testing results of the first development well KSG-57 (earlier referred to as "KPL-A") drilled under the Phase-III development drilling campaign in the Kharsang field. The well was spudded on July 28, 2011 and was successfully drilled to 875 meters measured depth (800 meter true vertical depth) on 15th August 2011, on time and within budget. The well was tested with a smaller capacity work-over rig, which was deployed at the site on August 21, 2011.

Based on wireline log interpretation results, formation pressure data from Sequential Formation Testing and Side Wall Core results, the consortium identified four separate intervals, totaling 20 meters of net sand, for testing of shallow C-50 and D-00 Girujan targeted reservoirs.

Upon testing the D-00 sands interval between 786-793 meters and activation through swabbing, the well started self-flowing. The well is presently flowing through 5.56 millimeter choke at a rate of around 170-180 barrels of oil per day (bopd), with Gas-Oil-Ratio of 30 volume by volume and maximum flowing tubing head pressure of 11 Kg/cm2. The initial results are as expected and encouraging. The production from the well is being sent to the Oil Collecting Station (OCS) for further processing.

The KSG-57 well will continue to remain under extended production testing to carry out a multi choke study till production is optimized. The testing of the remaining 11 meters of the two shallower sands will be completed at a later date.

GeoEnpro Petroleum Ltd., a joint venture of GeoPetrol and Jubilant Enpro (a member of the wider Jubilant Bhartia Group), is the operator of the Kharsang Field. Jubilant holds a 25% interest in the block through its subsidiary, Jubilant Energy (Kharsang) Pvt Ltd. The other members of the consortium are Oil India Ltd and GeoPetrol.

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BP, Reliance Make India Alliance Official

- BP, Reliance Make India Alliance Official

Tuesday, August 30, 2011
Reliance Industries Limited

Reliance Industries Limited (RIL) and BP on Tuesday announced the completion of BP's acquisition of a 30-percent stake in 21 oil and gas production sharing contracts (PSCs) that Reliance operates in India, including the producing KG D6 block.

This significant step will commence the planned alliance which will operate across the gas value chain in India, from exploration and production to distribution and marketing. The completion of the deal delivers one of the largest ever foreign direct investments into India.

The two companies will also form a 50:50 joint venture for the sourcing and marketing of gas in India which will also accelerate the creation of infrastructure for receiving, transporting and marketing natural gas.

Mukesh Ambani, Chairman and Managing Director, Reliance Industries, said, "The alliance with BP will boost our efforts to realize the true potential of India's hydrocarbon reserves. The globally renowned expertise of BP and the in-depth domestic experience of Reliance make for a formidable alliance which will deliver unparalleled value for the country in its pursuit of energy security."

"This is the beginning of what we expect to be a long and successful working partnership with Reliance, building on the strengths of each company," said Bob Dudley, BP group chief executive. "This major investment is directly aligned with our strategy of creating long-term value by forming alliances with strong national partners, gaining material positions in significant hydrocarbon basins and increasing our exposure to growing energy markets."

BP will pay RIL an aggregate consideration of US$7.2 billion subject to completion adjustments for the interests to be acquired in the 21 production sharing contracts. Further performance payments of up to US$1.8 billion could be paid based on exploration success that results in development of commercial discoveries.

The 21 oil and gas blocks cover approximately [220,000] square kilometers and lie in water depths ranging from 400 to over 3,000 meters. They include the KG D6 block that currently produces about [1.7] billion cubic feet of gas per day (bcf/d), over 40 percent of India's total gas production. RIL will remain operator of the PSCs and BP will bring its global deepwater, sub-surface and gas expertise to enhance exploration and development of the blocks.

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Jubilant Posts Test Results of Appraisal Well DDE-APP-1 in India

- Jubilant Posts Test Results of Appraisal Well DDE-APP-1 in India

Tuesday, August 09, 2011
Jubilant Energy N.V.

Jubilant announced the results of Appraisal Well DDE-APP-1 in the Deen Dayal East Field in the KG Block, which was spudded on the January 1, 2011.

The well was drilled by the operator (GSPC), with the objective of appraising the hydrocarbon bearing sands of the KG-16 discovery well and, in the process, to test the Cretaceous and Jurassic Rift Fill and younger sandstones that were found to be productive in other wells on the Deen Dayal structural complex. The well was drilled to 5,621 meters measured depth and encountered basement at 5,530 meters measured depth.

Two Drill Stem Tests ("DST") were undertaken after electric logging of the lower section of the well. DST-1 was undertaken in the rift fill section with perforation between 4,957 to 4,970 meters measured depth. This test flowed water at an average rate of 1500 bwpd and carbon dioxide ranging 20% to 28% was found in the well stream. DST-2A was undertaken in a shallower section with perforation between 4,774 to 4,786.5 meters measured depth and 4,789-4,799.5 meters measured depth. This flowed gas at 0.73 mmscfd with condensate at 60 bcpd from a 12/64 inch choke; 6% constant carbon dioxide was observed during the test.

The authorized cost to drill and test the well was approximately USD 75 million (USD 7.5 million net to Jubilant), the actual cost to date is approximately USD 69 million (USD 6.9 million net to Jubilant). The rig is currently waiting for a suitable weather window to move to the Well Head Platform.

Jubilant holds a 10% participating interest in this block through its subsidiary Jubilant Offshore Drilling Private Limited in India. Gujarat State Petroleum Corporation Limited, with an 80% participating interest, is the operator for the block. Geo Global Resources holds 10%.

Ajay Khandelwal, CEO of the Company commented, "The results of this well are not as expected and the operator is undertaking a full evaluation of the results. Any impact on 2C resources for DDE will be declared following a detailed evaluation by the operator and independent reserves consultants. Any evaluation will also take into account the possible upside of 2C resources from 20.5 square kilometer development area extension, as previously announced. Furthermore, the ongoing development of DDW (2P reserves area) is currently ahead of schedule with first gas expected in 2013."

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Hardy O&G Shuts-In India Well

- Hardy O&G Shuts-In India Well

Wednesday, August 03, 2011
Hardy O&G plc

Hardy O&G announced that on July 30, 2011 the PY-3 field, located in India, was shut-in.

The PY-3 oil field has been temporarily shut-in pending Management Committee approval of the award of a contract for the field's floating production system (FPS). We are working closely with all stake-holders to secure the necessary approvals and recommence production as soon as possible.

Hardy is the operator of the PY-3 field and holds an 18 percent participating interest.

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Jubilant Commences Drilling Campaign in India Kharsang Field

- Jubilant Commences Drilling Campaign in India Kharsang Field

Friday, July 29, 2011
Jubilant Energy N.V.

Jubilant announced the spudding on July 28, 2011 of KPL-A, the first development well of the Phase-III drilling campaign in the Kharsang Field, Arunachal Pradesh, India. The well is located in the northern area of the field and is an infill well targeting the shallow C-50 and D-00 producing Girujan sand layers. The well, which will be deviated by 272 metres towards the northeast, will be drilled to a total depth of around 800 metres TVD, is expected to take three weeks to drill and will cost approximately USD 1.75 million, of which USD 0.44 million will be payable by Jubilant.

The well will test the Upper Girujan C-50 and D-00 sand layers that are currently producing across 10 existing wells ranging from 25 to 140 bopd. The consortium expects to encounter around 35 meters of net reservoir sand.

The well is part of the seven well Phase-III drilling campaign in Kharsang which is planned to be completed by February 2012. On completion of this well, the rig will move to the next development well of the Phase-III drilling campaign.

GeoEnpro Petroleum Ltd., a joint venture of Geopetrol and Jubilant Enpro (a member of the wider Jubilant Bhartia Group), is the operator of Kharsang Field. Jubilant holds a 25% interest in the block through its subsidiary, Jubilant Energy (Kharsang) Pvt Ltd. The other members of the consortium are Oil India Ltd and Geopetrol.

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Ford to Invest $1 billion In Second Car Plant in India

- Ford to Invest $1 billion In Second Car Plant in India



Jul 27, 2011

Ford is planning to build a second car plant in India. According to a person briefed in the matter, Ford will invest $1 billion in the plant that will employ 5,000 people and begin producing cars in 2014.

The company said in the e-mailed reply to questions, "Ford continues to pursue an aggressive growth strategy in India to bring world class vehicles. As part of its plan to introduce eight new products by the middle of the decade Ford is significantly expanding its capacities in its existing facility in Tamil Nadu as well as exploring other options to meet the growing demand of consumers in India and export markets across the world."

Ford Motor (NYSE:F) has a potential upside of 59.3% based on a current price of $12.35 and an average consensus analyst price target of $19.67.

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India OKs Reliance Industries' $7.2B Asset Sale to BP

- India OKs Reliance Industries' $7.2B Asset Sale to BP

Friday, July 22, 2011
Dow Jones Newswires
NEW DELHI
by Rakesh Sharma

India approved Reliance's proposed $7.2 billion asset sale to BP, paving the way for the U.K. oil giant's largest venture in the South Asian nation.

The companies have been waiting for approval from the federal government since February when Reliance, controlled by billionaire Mukesh Ambani, agreed to sell a 30% stake to BP in 23 oil and gas blocks for $7.2 billion plus another $1.8 billion linked to exploration success. The deal includes the D6 block in the Krishna-Godavari basin, India's richest gas find so far, and Reliance has already received $2 billion from BP.

Oil Minister Jaipal Reddy said his ministry recommended the Cabinet Committee on Economic Affairs to approve the deal for 21 blocks as there were some technical issues over two non-producing blocks. The ministry may in future grant or refuse consent on the two blocks, he added.

"This is one of the major foreign investments in the history of India," Reddy said. "This transaction will not only mean investment of $7.2 billion by a foreign company in India, it will also mean induction of vast technical expertise to India's hydrocarbon sector."

Under the February agreement, BP and Reliance will also establish an equally owned joint venture for the sourcing and marketing of natural gas in India. That venture doesn't require government approval.

BP's chief executive, Robert Dudley, said the energy giant hopes to complete the deal in a matter of weeks.

Reliance didn't immediately comment on the announcement.

Future investments to develop Indian assets could bring its total payments to $20 billion, BP had said previously.

The deal gives BP access to new hydrocarbon resources and markets, in line with its strategy of continuing to increase exploration and access new exploration acreage, especially as it is yet to resume drilling operations in the Gulf of Mexico following last year's oil spill there.

Reliance is expected to gain from BP's deepwater drilling expertise to increase gas production. The company's D6 block is expected to boost India's gas supply, but several technical and geological issues have resulted in output from the field off the eastern coast falling below 50 million metric standard cubic meter per day from 60 MMSCMD last year.

Reliance's market valuation has taken a hit due to issued including the decline in gas production. Its shares closed 1.5% up at INR873.60 ahead of the announcement on the Bombay Stock Exchange, where the benchmark index closed up 1.6%.

Copyright (c) 2011 Dow Jones & Company, Inc.

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Jubilant Kicks Off Appraisal Ops at India Block

- Jubilant Kicks Off Appraisal Ops at India Block

Tuesday, July 19, 2011
Jubilant Energy N.V.

Jubilant has spudded the Srikantabari well (S-1) on July 18, 2011 in the Tripura block. This is the first well to appraise the Kathachari-1 (K-1) discovery. The well is located 4 kms north east and up-dip from K-1 and 3 kms south west and down dip of the ONGC's discovery in TMD-1 well (flowed approximately 1.7 mmscfd). The well will be deviated by 650 meters to the south west and will be drilled to a total depth of 3100 meters true vertical depth subsea. The well, which is being drilled by Quippo Oil & Gas Infrastructure Limited, is estimated to take 65 days to drill and will cost approximately USD 11 million on gross basis, excluding the testing cost.

The well will be drilled using managed pressure drilling due to high pressure in the region. This well will test the Middle Bhuban Sands encountered in the K-1 well, one zone of which had flowed 5.2 mmscfd. These sands are expected to be encountered approximately 800 meters up-dip of the K-1 sands. The well is the first deviated well to be drilled by Jubilant and is the fourth well to be drilled on the block.

Management's best estimate of gross un-risked prospective resources is 800 bcf for a deviated well compared to previous estimate of 480 bcf for drilling S-1 as a vertical well, as in the deviated well it is expected to encounter an additional sand package.

Further, as part of the Katharchari-1 appraisal program (which was approved by The Director General of Hydrocarbons in February 2011), Jubilant has completed seismic data acquisition of 160 lkm prior to the onset of the rainy season. The remainder of the survey will commence after the rainy season and will be completed by September 2011. This work was carried out in the southern part of the block, in and around the Katharchari-1 discovery well. Pursuant to the initial work program, the total seismic survey length was 137 lkm, which was later extended to 180 lkm.

Jubilant is the operator of this block and holds a 20% participating interest, through its wholly owned subsidiary Jubilant Oil and Gas Private Limited in India.

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Reliance Hits Gas Pay Offshore India

- Reliance Hits Gas Pay Offshore India

Wednesday, June 22, 2011
Hardy O&G plc

Hardy O&G announced its first gas discovery in the exploration well KG-D9-A2 within the D9 license.

The well KGD9-A2 was drilled to a total depth of 4,881 m MDRT with the objective of exploring the play fairway in the Early and Late Miocene Channel Levee Complex in a water depth of approximately 2,700 m. Three sand reservoirs with a gross thickness of approximately 22 m were encountered and evaluated by wireline MDT. This discovery, named 'Dhirubhai - 54' has been notified to the Government of India and DGH. The potential commerciality of this discovery is being ascertained through more data gathering and analysis. This play fairway is expected to cover a considerable area within the block.

The D9 exploration license is located in the Krishna Godavari (KG) Basin on the east coast of India and presently covers an area of approximately 8,695 km2. Hardy holds a 10 percent participating interest in the license which is operated by Reliance Industries Limited. The license's minimum work program provides for the drilling of four exploration wells.

Commenting on the well results, Yogeshwar Sharma, Chief Executive Officer of Hardy said, "We are encouraged by this discovery which extends the proven Miocene play fairway into the frontier D9 block. The discovery further enhances our understanding of the block's petroleum systems and reinforces our enthusiasm for unlocking its hydrocarbon potential. The D9 joint venture expects to drill the fourth exploration well prior to the end of 2011."

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India's ONGC to Invest $7.7B in Gas Field

- India's ONGC to Invest $7.7B in Gas Field

Tuesday, June 21, 2011
Deutsche Presse-Agentur (dpa)

India's state-run Oil and Natural Gas Corporation plans to invest 7.7 billion dollars to develop one of the country's largest gas fields off the eastern coast, officials said Tuesday.

ONGC was planning to drill eight additional wells in the block in the Krishna-Godavari (KG) basin and had sought permission from the Directorate General of Hydrocarbons, a company spokesperson said.

"A total life-cycle cost as per the proposal for Declaration of Commerciality (DoC) is of the order of 7.7 billion dollars," the official said.

The gas field could produce upto 30 million cubic meters a day in five years, according to the report in the Economic Times daily.

The oil major is also looking for tie-ups with international partners to maximize the output from the deep-sea field.

The KG basin is India's most prolific gas basin and home to some of India's biggest natural gas discoveries in recent years.

India depends on imports for about 70 percent of its oil and gas needs.

Copyright 2011 dpa Deutsche Presse-Agentur GmbH

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Cairn India Reports Record Quarterly Profit

- Cairn India Reports Record Quarterly Profit

Wednesday, May 25, 2011
Cairn India Ltd.

The following commentary is provided in respect of the audited financial results and operational highlights of Cairn India Limited and its subsidiary companies (referred to as Cairn India) during the financial year 2010-11 (FY 2010-11). Please note that FY 2010-11 refers to the period April 2010 - March 2011.

• FINANCIAL HIGHLIGHTS
  • Revenue in Q4 FY 2010-11 at R 36,545 million (US $808 million); FY 2010-11 at R 102,779 million (US $2,255 million)
  • Profit after tax (PAT) in Q4 FY 2010-11 at R 24,578 million (US $543 million); FY 2010-11 at R 63,344 million (US $1,390 million)
  • Cash Flow from Operations in Q4 FY 2010-11 at R 26,110 million (US $577 million); FY 2010-11 at R 67,122 million (US $1,473 million)
  • Net Cash of R 29,070 million (US $651 million) as on 31 March, 2011
  • Gross cumulative Rajasthan development capital expenditure at US $2,995 million of which US $703 million was spent during FY 2010-11
• OPERATIONAL HIGHLIGHTS
  • Average Daily Sales (Working Interest) for Q4 FY 2010-11 at 96,417 barrels of oil equivalent (boe); FY 2010-11 at 81,254 boe
  • Average Daily Gross operated production for Q4 FY 2010-11 at 161,194 boe; FY 2010-11 at 149,103 boe
  • Maintained low cost operations; field direct opex at US $2.3 per barrel (bbl) for FY 2010-11
  • Gross crude oil production in excess of 13 million barrels (mmbbls) from operated assets in Q4FY 2010-11; contributing ~20% of India's current domestic crude production
  • Won the "Golden Peacock Award for Corporate Social Responsibility" for the year 2011
• Rajasthan
  • Mangala Field
    • Current production at 125,000 barrels of oil per day (bopd); cumulative crude sales in excess of 39 mmbbls to Indian refiners
    • Development drilling progresses as planned; 143 wells drilled to date, 85 completed and 62 producing

India Revives Energy Ties with Iran

India Revives Energy Ties with Iran

Monday, May 09, 2011
Knight Ridder/Tribune Business News
by Utpal Bhaskar & Elizabeth Roche, Mint, New Delhi

In a visible attempt to re-engage with Iran's energy sector, India has submitted a reworked master development plan for Iran's Farsi natural gas block.

A consortium led by ONGC Videsh Ltd (OVL), the overseas arm of state-owned Oil and Natural Gas Corp. Ltd, won the bid in 2002, but is yet to develop the gas block.

While OVL is the operator of the Farsi block, in which it holds a 40% stake, Indian Oil Corp. Ltd has an equal stake and the balance 20% is held by Oil India Ltd. The block cannot be developed without a master plan.

The plan, submitted last month, could reduce the country's energy risks by diversifying its supplies, but could also cause tension in India-US ties.

India had recently preferred two European companies over US ones in the shortlist for the $10 billion ('44,600 crore today) jet procurement deal for the Indian Air Force, billed as India's biggest defence contract yet. Seattle-based Boeing Co. and the Bethesda, Maryland-based Lockheed Martin Corp., also contenders for the deal, were not among the finalists.

Indian government officials, underlining the country's reliance on Iran as an energy partner, have been seeking a more flexible approach from the US and other members of the international community on sanctions against Iran.

India's action comes against the backdrop of two sets of sanctions imposed in June by the US and United Nations that included strictures against Iran's energy and banking sectors, which could also hurt firms from other countries doing business with Tehran.

"India can't find alternative sources of energy overnight," said a government official, who did not want to be named.

The development plan was prepared with the help of Sydney-headquartered WorleyParsons Ltd. The consortium had earlier submitted a feasibility report to National Iranian Oil Co. (NIOC) in November 2008. The Iranian firm then accepted the commercial viability of gas production at Farsi block, after which the first plan was submitted in April 2009.

"We submitted the (revised) MDP (master development plan) last month. We had earlier submitted it but the Iranians had sought some modifications to it," said the chief executive of one of the consortium partners, who did not want to be named. "We haven't given up on Iran."

Mint reported on 12 January about legal advice sought by OVL cautioning it against proceeding with the Iran projects, providing a test case of how far India is willing to go to accommodate US sensitivities at the cost of its energy security.

"In its quest for energy security, India has been engaging a host of countries, including Iran, which is an important source of hydrocarbon products for us," Vishnu Prakash, spokesperson for the Indian foreign ministry, said in an emailed response. "India's outlook remains unchanged."

The investment for exploration and production work will amount to around $5 billion. While the Indian consortium doesn't have ownership rights, its members will be paid a 15% return on investment they make once they are awarded development rights.

The Farsi block is estimated to have reserves of up to 21.68 trillion cu. ft (tcf), with recoverable reserves of around 12.8 tcf.

"There has been suspended animation on Iran projects. While on the one side, there have been various sanctions in place, on the other, several projects are active, including the ones being undertaken by the Chinese," the chief executive quoted above said. "We don't want to disengage."

NIOC could not be contacted. While Iran embassy officials in New Delhi did not respond to phone calls on Friday, the US embassy did not respond to an email query at the time of going to press.

Iran has the world's second largest oil and natural gas reserves. After India and the US signed a civilian nuclear deal in 2008, several Iran-related Indian projects have either been put on hold or dropped.

India and Iran are also trying to resolve an impasse over the method of settlement for bilateral oil trade, after India decided to discontinue payment through the 35-year-old Asian Clearing Union system.

"We seem to have no consistent policy, especially when it comes to Iran (in these matters)," said Lydia Powell, head at Centre for Resources Management, at New Delhi-based Observer Research Foundation, a think tank.

Kalim Bahadur, former international studies professor at Jawaharlal Nehru University, sees it as a move by India to diversify its energy sources, given the unrest in West Asia.

"I think India is looking for newer energy sources, given that there is so much uncertainty in the Middle East, which has been its traditional source of oil," he said. "If uncertainty persists, oil prices will be affected and could hurt our economy and cause problems. The government seems to be weighing its options."


Copyright (c) 2011, Mint, New Delhi. Distributed by McClatchy-Tribune Information Services.

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India, RIL in Proxy Fight Over KG-D6 Output Decline - Bernstein

India, RIL in Proxy Fight Over KG-D6 Output Decline - Bernstein

Thursday, May 05, 2011
Asia Pulse Pte Ltd

India's Reliance Industries wants a hike in the price of natural gas to resume drilling in the KG-D6 fields, which have seen a sharp drop in output due to drilling of less wells than committed, investment research group Sanford C Bernstein & Co said.

"We believe that RIL doesn't believe it is worth its while to invest additional capital in drilling wells when the price at the beach remains at US$4.20" per million British thermal units, Neil Beveridge, a Hong Kong-based analyst for Bernstein, said in a report on Thursday.

Gas output from the Dhirubhai-1 and 3 fields in the KG-D6 block had steadily risen to 53 million standard cubic meters per day in March last year, but have dropped to below 42 mmscmd now instead of rising to the projected level of 61 mmscmd.

Another 8 mmscmd is produced from the MA field in the same block, taking the total output from KG-D6 to about 50 mmscmd.

The fall in output due to drilling of less wells had earned RIL the ire of the government and the regulator DGH.

While the DGH is pressing RIL to drill more wells outside the main channel that is currently producing, the government is pressuring RIL by directing it to supply gas to priority sectors like fertilizer and power and cut off sales to refineries and petrochemical plants, including its own.

"We believe that this is a proxy fight between the government and RIL," Bernstein Research said.

"Lower production output is primarily a function of the hiatus in development drilling," it said. "While it seems likely that the reservoir is more complex than originally anticipated, performance on a per well basis has not been too dissimilar to the original field development plan.

"Instead, the lower number of development wells drilled (18 versus 22 planned) is primarily the reason for the under-performance," it said.

Bernstein said completion of Phase - I drilling plus initiation of Phase-II drilling, when the total number of wells could reach up to 50, would restore output growth.

"We believe that the natural rate of the decline in production for the KG-D6 wells is around 20 percent annually, or around 5 percent per quarter, not substantially different from similar fields around the world," it said.

"In case RIL doesn't take any more action on the drilling of wells and connecting those to the reservoir and continues operating with 18 wells, we expect the production to reach a level of around 37-38 mmscmd by FY'2013," Bernstein said.

The government has asked the company to drill 11 wells by the fiscal-end to take the total number to 31 as had been planned when RIL won approval for investing $8.8 billion, S.K. Srivastava, the director general of the country's oil regulator, had said earlier this week.

RIL will submit a drilling plan in two weeks, he had said on May 2.

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Petronas Sells Cairn India Stake for $2.1B

Petronas Sells Cairn India Stake for $2.1B

Tuesday, April 19, 2011
Dow Jones Newswires
by Ankur Relia, Raghavendra Upadhyaya & Eric Yep

Malaysia's Petroliam Nasional Berhad, or Petronas, Tuesday said it exited Cairn India by selling its entire 14.94% stake in the oil and gas explorer for about $2.1 billion.

Petronas held 283.4 million shares in the Indian unit of Cairn through its overseas arm Petronas International Corp.

"The transaction brings to a close a successful association as a shareholder with Cairn India since 2006," Petronas said in a statement.

Petronas had raised its holding in Cairn India to 14.94% in 2009-10 after acquiring a 2.3% stake from Cairn Energy.

Petronas didn't reveal the names of the buyers but a person with knowledge of the matter told Dow Jones Newswires that the stake was sold to India-focused miner Vedanta and institutional investors in India via block deals.

Bank of America Merrill Lynch was the sole adviser on the deal, said the person, who declined to be named.

The stake sale by Petronas brings Vedanta closer to its goal of acquiring a majority stake in Cairn India as analysts don't expect a big response to Vedanta's open offer. Petronas' sale may also allow Edinburgh-based explorer Cairn Energy to retain a larger stake in Cairn India.

In August last year, Vedanta had offered to buy a 51%-60% stake in the Indian unit of Cairn Energy, in a deal expected to cost up to $9.6 billion.

The deal is awaiting approval from the Indian government.

Cairn Energy owns a 62.37% stake in Cairn India.

Vedanta has proposed to acquire up to 51% of Cairn India from its U.K. parent for INR405 a share. Vedanta unit Sesa Goa launched an open offer on April 11 for up to 20% of Cairn India from minority shareholders at INR355 a share. The open offer price doesn't include the INR50 non-compete fee that Vedanta had offered to Cairn Energy.

The open offer closes on April 30. Shares of Cairn India, which had earlier risen to as much as INR370, closed up 2.3% on Tuesday at INR344.25.

Vedanta, Cairn Energy and Cairn India didn't immediately respond to queries.

Earlier Tuesday, data on Factset showed that about 283.43 million shares of Cairn India were traded through block deals on the Bombay Stock Exchange. The three largest deals were for 265.19 million shares traded at a weighted average price of INR331.08 apiece, 12.08 million shares at INR331.08 each and 5.07 million shares at INR331.07 apiece.

The CNBC-TV18 television channel reported, citing sources it didn't name, that Vedanta bought an 11% stake in Cairn India from Petronas.

Cairn Energy has extended by more than a month the deadline for the stake sale to Vedanta to May 20 in order to accommodate the completion of the open offer and as an Indian ministerial panel scrutinizes the deal.

Cairn India holds stakes in 10 oil and gas blocks in India, including the huge RJ-ON-90/1 oil block at Barmer in western Rajasthan state. The block's output of 125,000 barrels a day accounts for about 17% of India's total crude production.

India to Develop Vessels to Explore Ocean Floor for Resources

India to Develop Vessels to Explore Ocean Floor for Resources

Monday, April 11, 2011
Knight Ridder/Tribune Business News
by Jacob P. Koshy, Mint, New Delhi

India plans to spend '500 crore in developing a series of specialized vessels capable of scouring deep ocean floors for minerals, metals and gas hydrates.

Several South Asian nations, including Sri Lanka, Myanmar and India, have laid claim to large but little explored swathes of the Indian Ocean for exclusive mining rights. A United Nations (UN) body is expected to decide on this later this decade.

Experts say India's limited fossil fuel resources made it necessary for the nation to develop deep-sea technological capabilities within the decade.

"We have to adequately prepare ourselves with such technology for in the future countries are unlikely to share such know-how," said a Planning Commission official, who did not want to be identified. "By the time the UN decides, we should have at least three-to-five indigenous developed vehicles that can explore the sea at different depths."

An official in the science and technology ministry, who also did not want to be identified, confirmed the program.

Key untapped mineral resources in the sea include polymetallic nodules and cobalt-rich manganese crust. The nodules, which resemble coal, contain copper, cobalt, nickel and manganese and are viewed as potential resources to meet increasing global demand for these metals. Gas hydrates are crystalline solids consisting of gas molecules, usually methane, each surrounded by a cage of water molecules, akin to ice.

According to preliminary government estimates, India has access to about 0.5 million sq. km in the Indian Ocean, which could be worth about '5,000 crore in resources.

Currently only Chennai-based National Institute of Ocean Technology has developed a robotic crawler that can plunge to 5,000m and be remote-controlled by ship to scour precious metals and minerals.

Only four other countries-- China, France, the US and Russia--have robotic vehicles that plumb those depths.

Although several private companies--mostly American--have developed robotic vehicles for similar purposes, renting them is enormously expensive.

"Along with the cost of the ship and man-days spent in launching the vehicle, it can work out to several lakhs a day," said Ananda Ramadoss, a senior researcher at the institute and a key scientist associated with developing the robotic vehicle.

Bharath Rajeshwar, a defence analyst who specializes in international mining agreements, said it was high time India embarked on a strategic, technology program to tap the ocean's wealth.

"We can't afford to go at the same pace as India's space program. The race for precious metals is going to get more vicious over the decade with a rise in electronics hardware," said Rajeshwar. "India can't afford to be an importer (of metals) forever."

Cairn Energy profits boosted by Indian oil field

Cairn Energy profits boosted by Indian oil field

22 March 2011 Last updated at 10:34 GMT

Edinburgh oil firm Cairn Energy has announced profits are up 20-fold since oil started flowing from its field in Rajasthan.

 The company made US$1.1bn (£674m) in pre-tax profits last year, before extensive exceptionals, compared with US$53m (£32m) in 2009.

Production from the Mangala field began in August 2009, and has risen to 125,000 barrels per day.

 Cairn's exploration programme off Greenland will continue this year.

The company is awaiting permission to increase that to up to 240,000 barrels.

A more significant obstacle for the oil company is the need for Indian government approval of a sale of its majority stake in its Cairn India subsidiary.

Chief executive Sir Bill Gammell told BBC Scotland that the company is funded to continue its drilling programme off the coast of Greenland, even if it does not release capital on schedule from the sale of its controlling stake to India-based Vedanta Resources for at least US$6bn (£3.8bn).

He said Cairn Energy has been operating in India for 15 years, and that experience should be a help in unravelling the dispute with the state-owned oil company ONGC.

'Strong relationships'

Sir Bill said: "It's been difficult. I've always taken the view you're a guest in other people's country.

"It's been frustrating for us, there are rules, it's up to the Indian government how to play it.

"We've built strong relationships and partnerships, and in the end of the day, we tend to get the right resolution".

He added that "sanctity of contract" is important in India.

Cairn's main argument has been a government approval to break the previous deal with ONGC would undermine foreign investors confidence in India as having a reliable legal system.

On the 15 April deadline for the deal between Cairn and Vedanta, the chief executive said it was important to get "clarity" before that date.

Cairn's exploration programme off Greenland is scheduled to continue this year, with drill vessels hired for the drilling of four wells as well as seismic surveys.

It began last year, with results described as "encouraging".

Link

http://www.bbc.co.uk/