New Delhi: The India unit of UK-based Cairn Energy Plc raised estimates of in-place reserves at its Rajasthan field, the country’s largest onshore petroleum deposit, to four billion barrels of oil equivalent from 3.7 billion.
Cairn India Ltd also lifted its estimates on potential reserves to 6.5 billion barrels of oil equivalent from four billion on Tuesday.
As a result, “the recovery potential has doubled from 700 million barrels to 1,400 million barrels, with the plateau production increasing from 240,000 bpd (barrels per day) from the earlier approved plateau production of 175,000 bpd,” said Rahul Dhir, chief executive of Cairn India.
However, the directorate general of hydrocarbons, the regulator, said it doesn’t endorse such numbers. “We have received a copy of the report as prepared by the independent agency,” said director general of hydrocarbons S.K. Srivastava. “The DGH does not certify contingent resources. Contingent and prospective resources are futuristic resources.”
An official of state-run Oil and Natural Gas Corp. Ltd, which has a 30% stake in the Rajasthan field that’s operated by Cairn India, said the DGH hadn’t ratified the new numbers, on condition of anonymity. Cairn India said it had informed the regulator of the revised estimates.
“There has been a significant increase in the prospective resource base. All stakeholders including DGH were informed regarding the revised estimates,” Cairn India spokesperson Manu Kapoor said by email. “In addition to a comprehensive internal review, (consultants) DeGolyer and MacNaughton have conducted an independent assessment of the majority of the leads and prospects in the prospective resources.”
Shares of Cairn India rose 3.76% on the Bombay Stock Exchange to close at Rs292.80 on Tuesday. The benchmark Sensex index rose 0.23% to 17,451.02 points.
Cairn Energy jumped to a record in London trading after announcing the start of oil drilling in Greenland and forecasting higher output at its Rajasthan field. It climbed as much as 12% to 425.1 pence, the highest price since the stock began trading in 1989. The shares were at 418.5 pence as of 11:28am local time, valuing the Edinburgh-based company at £5.84 billion (8.75 billion).
Production of the waxy crude oil from the Rajasthan field is around 25,000 bpd, which the company expects to ramp up to 125,000 bpd by the second half of this year.
Cairn India has sales arrangements to supply 1,43,000 bpd to refiners such as Hindustan Petroleum Corp. Ltd, Mangalore Refinery and Petrochemicals Ltd, Indian Oil Corp. Ltd, Reliance Industries Ltd and Essar Oil Ltd. Cairn has already made an investment of $4 billion in the Rajasthan field with an additional $2 billion to be invested over the next two years. “We are fully funded for the next phase,” Dhir said.
Bloomberg contributed to this story.