Cairn India will start Oil production at rajasthan plant this Month

Cairn will start pumping crude from its Rajasthan fields later this month. Initial production will be 30,000 barrels per day (bpd) from the first train, and a second processing system of 50,000 bpd is expected to start by the end of the year. 'We intend to keep our costs low and see production cost at about USD 3.5 per barrel. Transportation cost will be another USD 1.5 (per barrel),' Chief Executive Officer Rahul Dhir said. The commercial terms and pricing negotiations for the initial offtake of the Rajasthan crude have been concluded with IOC and MRPL, considering the last six months pricing it translates to a 10-15 percent discount to Brent. Cairn India holds a 70 percent stake in RJ-ON-90/1 block in western India and state-run explorer Oil & Natural Gas Corp holds the balance.
Cairn is spending USD 1 billion to build a pipeline to transport the crude to coast of Gujarat. Dhir said it was expected to be operational by the fourth quarter. Chairman Bill Gammell earlier this week told shareholders the company was targeting production of 125,000 bpd in the first half of 2010, and saw potential to increase peak production from the Rajasthan fields far above the development plan estimate of 175,000 bpd. Cairn India Ltd expects to hold costs at about USD 5 per barrel for crude oil produced from its Rajasthan fields, a top official said, helping the energy explorer reap strong revenues this fiscal year.