Low Cost Operations are Key to Success

Rahul Dhir
CEO and MD of Cairn India.
In the wake of unsuccessful oil and gas explorations activities and low oil prices in the country, it has become a herculean task for E & P companies to maintain profits. Though India is abundant with oil and gas reserves, exploration and production remains a challenge. In such a situation low cost operation and constant efforts to maximize production can give a boost to E & P companies, says Rahul Dhir, CEO and MD of Cairn India.

How can E & P cos. maintain their top & bottom lines, especially in context to low oil prices? How does Cairn India plan to deal with this to maintain the profit margins?
E & P companies will have to maximise production. At Cairn we will continue to focus on our strategy of low cost operations. Over the years Cairn India has demonstrated that it is capable of operating its assets on a very cost effective basis. This allows the production to be profitable at low oil prices. Tell us about the field development and production plan in Sri Lanka . Following our success in Sri Lanka, Cairn Lanka has entered the second phase of the exploration with the approval from the Government of Sri Lanka. Additional 600-km2 3D seismic data has been acquired which will firm up several promising leads and prepare the Operator for further exploration drilling in mid CY 2013.

What are the results of the EOR pilot project started by Cairn India in 2010 so far and where have the tests been conducted?
We have investigated a number of Enhanced Oil Recovery (EOR) techniques to increase the recovery of oil from Mangala, Bhagyam and Aishwariya fields. The first phase of the EOR pilot consisting of four injectors, one producer and three logging observation wells has been drilled, completed and hooked up to the facilities. The initial production phase using only water injection that commenced in December 2010 was completed in July 2011.

The Polymer injection phase is progressing well since August 2011. Preparations continue for the injection of Alkali-Surfactant-Polymer (ASP), the next phase of the pilot. The results of the pilot have clearly demonstrated that the application of the polymer in the Mangala field will result in an increase in the overall recovery from the field as per earlier expectations.

Based on the encouraging results from the polymer pilot, the Board has approved the submission of an FDP to the JV for a full field implementation of the polymer in the field. Accordingly, 70 MMBOE has been booked under 2P category. For FY13, we are looking at gross capex of 1 – 1.25 billion USD our of our exploration and production activities. We intend to utilise this gross capex for our existing assets.

Tell us about the progress of production from Cairn India's blocks in Rajasthan and along India’s west and east coasts? What steps is Cairn India taking to maximise production from the existing oil fields?
The Rajasthan block is producing 175,000 BOPD, thanks to the GoI approval for higher Mangala offtake of 150,000 BOPD. Other key drivers for reaching this milestone were the commencements of production from other fields within the block. The Saraswati field commenced production on 27 May 2011 and till date has produced over 75,000 barrels of oil. Bhagyam commenced oil production on 19 January 2012 and is currently producing at around 25,000 BOPD. Marginal oil field Raageshwari also commenced production on 8 March 2012 and is currently producing in excess of 250 BOPD.

For FY2012, the average gross production from the Cambay Basin block was 8,242 BOEPD - comprising an average daily crude oil production of 5,204 barrels and an average daily gas production of 18 MMSCFD. Going forward, we intend to execute an infill drilling campaign in the Lakshmi field. This will help sustain oil production from the block.

Ravva field commenced crude oil and natural gas production in 1993. For FY2012, the average gross production from the Ravva field was 36,379 BOEPD- comprising an average daily oil production of 27,165 barrels and average daily gas production of 55 MMSCFD. The Offshore Production Platform at Ravva Asset received the Oil Industry Safety Award for the year 2010 - 2011.

Does Cairn India plan to have its footprint in refining in Rajasthan ? Have you received any proposal for the same?
We have our largest oil field in Rajasthan, which is the key contributor to the Cairn Indias growth. No discussion/proposal regarding the refinery has come till date. If something comes up, we will decide on the basis of merit and project economics.

What is the key element in Cairn India's exploration strategy ?
Our exploration strategy is based on portfolio of high reward prospects across the risk spectrum. We are a long-term player. We have large proprietary database and experienced team. We have built the capabilities toexplore. We have had successful exploration for more than 10 years. We ventured into Sri Lanka, and have been successful. So, we will continue to take this exploration strategy forward.