Cairn India exploring options to deliver crude

Business Standard, Mumbai
Cairn India Ltd, which is scheduled to list on Jan 9 after a $1.18 billion initial public offering last month, is exploring various options to deliver crude from its Rajasthan fields, a senior company official said.

"We have mapped out basically all the refining capacity and infrastructure in the region," said Rahul Dhir, chief executive at Cairn India, which is the Indian arm of British explorer Cairn Energy Plc.

"We are in talks with many parties, including Indian Oil Corp, on how much of the Rajasthan crude they could take," Dhir told the media in an interview on Wednesday.

"We would like to go to people who either have multiple refineries or opt for multiple buyers," he said.

Cairn's IPO was subscribed at Rs 160 a share ($3.60), the lower end of its Rs 160-190 price band, as some analysts were concerned about how Cairn would transport its crude from the northern state of Rajasthan in the absence of a pipeline.

Dhir said Cairn India's production contract states it is the responsibility of the Indian government or a company it nominates to lift the crude oil from the Rajasthan fields.

But the company nominated by the government, Mangalore Refinery and Petrochemicals Ltd, has asked for a discount on the crude, making the pipeline plans uncertain.

Dhir, however, was confident the government would soon resolve this issue.

Cairn, which holds a 70 per cent stake in the Rajasthan asset with Oil and Natural Gas Corp holding 30 per cent, plans to spend $1.5 billion in the next three years to develop the Rajasthan fields and on exploration.

"There is a significant value that is going to come from this company without relying on exploration for its success in the next three years," Dhir said.

Cairn is expected to produce 20 per cent of India's domestic production by the end of the decade, he said.

The company raised $822 million in a pre-IPO placement in November by selling 12 per cent of its local operations, mainly to Malaysia's state-run oil firm Petronas.