Billionaire Anil Agarwal has asked Cairn India Ltd, which enjoys the highest profit margin among the top Asian oil companies, to explore ways to double output as his mining business in the South Asian nation flounders.
Cairn India “has a mission” to accelerate its target to 4 lakh barrels a day from about 2 lakh barrels, chief executive officer P Elango said. The company, which possesses about $3 billion of cash, plans to drill 450 new wells in its fields in Rajasthan, he said. “The vision is to double production,” Elango said, without giving a timeline and budget for the plan. “It’ll be about building on the exploration success and deploying technology to develop it faster. We’ve removed all hurdles in the eco-system and the right policy framework is in place.”
Agarwal, who bought Cairn India in 2011, is depending on higher returns from the $8.7 billion acquisition to counter a slump in his metals businesses after environmental challenges in India halted his iron ore mines and impeded plans for an integrated aluminum complex.
Cairn India is boosting spending to extract from hard-to-access pockets and drill more wells in the Rajasthan field after winning state approval this year.
“The basin has the potential,” said P PhaniSekhar, a Mumbai-based fund manager at Angel Broking Ltd.
“It’s a question of digging more wells and having the infrastructure in place. But you can’t increase the output as you wish, you need government approvals.”
Cairn India plans to spend $3 billion in three years to raise output, according to an October 22 statement. In January 2013, the government approved the company’s plan to raise production to a peak rate of 300,000 barrels a day and next month allowed it to explore for new oil deposits in Rajasthan.
Cairn India seeks oil swaps to circumvent export ban
Cairn India Ltd, the nation’s biggest onshore crude oil producer, is proposing swap deals in the commodity to help skirt the government’s ban on exports that yield higher margins.
“Some Japanese utilities and Singapore-based refiners are interested in the high-wax crude extracted from Cairn’s fields in Rajasthan,” chief executive officer P. Elango said. “The company has sought India’s approval for a tripartite agreement that would replenish the exported volume with no loss to any of the parties including the government,” he said.
Billionaire Anil Agarwal, who controls Cairn India, is seeking to increase the best profit margin among the biggest Asian oil companies as his metals and mining businesses flounder in the South Asian country. Shipping to customers who are best equipped to process the low-sulfur crude may help the company command a premium versus a 15% discount on Brent prices it offers to local refiners, including Indian Oil Corp. Ltd.
“In our case, what we are saying is not exports,” Elango said in New Delhi. “We are saying, let’s do a swap arrangement where this crude can go to another buyer as some of them have much more value extraction potential of the oil,” he said.
“Cairn India, based in Gurgaon near New Delhi, has already sent a proposal to the government, which has been received with an open mind,” Elango said. The three-way deal would essentially require Cairn India to flout India’s ban on crude oil exports, while its local customer makes up for the deficit by sourcing the commodity from an overseas supplier.
Cairn India “has a mission” to accelerate its target to 4 lakh barrels a day from about 2 lakh barrels, chief executive officer P Elango said. The company, which possesses about $3 billion of cash, plans to drill 450 new wells in its fields in Rajasthan, he said. “The vision is to double production,” Elango said, without giving a timeline and budget for the plan. “It’ll be about building on the exploration success and deploying technology to develop it faster. We’ve removed all hurdles in the eco-system and the right policy framework is in place.”
Agarwal, who bought Cairn India in 2011, is depending on higher returns from the $8.7 billion acquisition to counter a slump in his metals businesses after environmental challenges in India halted his iron ore mines and impeded plans for an integrated aluminum complex.
Cairn India is boosting spending to extract from hard-to-access pockets and drill more wells in the Rajasthan field after winning state approval this year.
“The basin has the potential,” said P PhaniSekhar, a Mumbai-based fund manager at Angel Broking Ltd.
“It’s a question of digging more wells and having the infrastructure in place. But you can’t increase the output as you wish, you need government approvals.”
Cairn India plans to spend $3 billion in three years to raise output, according to an October 22 statement. In January 2013, the government approved the company’s plan to raise production to a peak rate of 300,000 barrels a day and next month allowed it to explore for new oil deposits in Rajasthan.
Cairn India seeks oil swaps to circumvent export ban
Cairn India Ltd, the nation’s biggest onshore crude oil producer, is proposing swap deals in the commodity to help skirt the government’s ban on exports that yield higher margins.
“Some Japanese utilities and Singapore-based refiners are interested in the high-wax crude extracted from Cairn’s fields in Rajasthan,” chief executive officer P. Elango said. “The company has sought India’s approval for a tripartite agreement that would replenish the exported volume with no loss to any of the parties including the government,” he said.
Billionaire Anil Agarwal, who controls Cairn India, is seeking to increase the best profit margin among the biggest Asian oil companies as his metals and mining businesses flounder in the South Asian country. Shipping to customers who are best equipped to process the low-sulfur crude may help the company command a premium versus a 15% discount on Brent prices it offers to local refiners, including Indian Oil Corp. Ltd.
“In our case, what we are saying is not exports,” Elango said in New Delhi. “We are saying, let’s do a swap arrangement where this crude can go to another buyer as some of them have much more value extraction potential of the oil,” he said.
“Cairn India, based in Gurgaon near New Delhi, has already sent a proposal to the government, which has been received with an open mind,” Elango said. The three-way deal would essentially require Cairn India to flout India’s ban on crude oil exports, while its local customer makes up for the deficit by sourcing the commodity from an overseas supplier.
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