Cairn to Say If India Deal is in Pipeline

By William Lyons

CAIRN Energy is set to reveal this week that it is making progress towards agreeing a deal to build a 311-mile pipeline to carry oil from its Rajasthan fields for refining.

The Edinburgh oil and gas company has been embroiled in discussions with the Indian government since its Indian-listed subsidiary, Cairn India, made a series of bumper finds starting in January 2004, containing more than one billion barrels of oil in place.

The Rajasthan fields are expected to begin producing oil in 2009 and to reach full production of 150,000 barrels of oil equivalent by 2010.

Peter Hitchens, an oil analyst at Seymour Pierce, said: “The financials are completely irrelevant because the key to this company is Rajasthan and that doesn’t really stand up until 2009. But there are a number of questions to be answered. Have they got the pipeline approval sorted out? When will that go through, because that is key to getting the field up and running. Will they have to pay for it? There are so many uncertainties surrounding this pipeline that we need to get sorted out and hopefully we will have some more flesh on the bone.”

This week, Cairn may also give an update on subsidiary Capricorn Oil and Gas. Cairn has a 90 per cent holding in the exploration company, and although it is dwarfed by the Indian business, its strategic importance is key. Its Capricorn subsidiary has interests in countries ranging from Greenland to Australia and last week acquired MedOil, a London-based oil and gas exploration company.

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