Cairn India Ltd., the operator of India's largest onland oil block, said Saturday it will invest $2 billion over the next few years as part of efforts to raise output by 71% from its oil fields in India's north western state of Rajasthan.
"The fields are currently producing around 175,000 barrels a day and have the potential to support production of 300,000 barrels a day. That would need such an investment," Chief Executive P. Elango told reporters.
Cairn India's investment and exploration plans will also help raise domestic crude and gas production, which is witnessing a declining trend as most of the country's producing fields are ageing.
The decline in the production of the fossil fuel has hurt key consumers such as power and fertilizer firms that have been forced to raise their imports. India imports more than 80% of its crude oil needs.
Oil minister Veerappa Moily said the government aims to cut the country's import dependence by half by 2020 and make it completely nil by 2030 and would encourage more private investment in the sector to boost local hydrocarbon output.
"I am trying to send a new natural gas pricing policy proposal and a shale gas policy proposal to the Cabinet in the coming days," Mr. Moily said at the same event. "This would help in raising local output."
India's crude oil output in February declined 4% and natural gas by 20%, underscoring the need for the country to look for ways for raising local output.
"Encouraging investment by making a transparent policy (on hydrocarbons) that would cut the time spent in seeking regulatory approvals for exploration activities would be one of such efforts in increasing local production," Mr. Moily said.
Cairn India said it has already invested 180 billion rupees in the oil fields and plans to spend another 60 billion rupees in the next financial year starting April 1.
The explorer Saturday started production at Aishwariya, the third-largest field in Rajasthan, and aims to reach 10,000 barrels of output at its peak.
Other fields operated by the Vedanta group company include the Mangala, Bhagyam and Saraswati fields. It also operates the Raageshwari gas field from where it Saturday announced the company's first-ever commercial sale of about 5 million standard cubic feet of gas at $5 million British thermal unit.
While Cairn India holds a 70% stake in the Rajasthan block, state-run Oil & Natural Gas Corp. owns the remaining.
Copyright (c) 2012 Dow Jones & Company, Inc.
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