British oil exploration and production major Cairn Energy, which announced a major oil discovery in Rajasthan on Monday, said that it plans to make more acquisitions in Asia, especially in India and Nepal, during the year.
'Rajasthan oil find looked like West Texas'
Cairn Energy's country manager (India), Alan Linn, told Business Standard on Tuesday that investment plans for the country for the year have not been finalised as yet, but it will be substantial with Asia, especially the sub-continent, becoming the focus of the company's business worldwide.
"Nearly 95 per cent of our business is now coming from India, Bangladesh and Nepal, and we want it to remain that way," Linn said.
As a part of that strategy, Cairn will acquire exploration blocks in the country through the New Exploration and Licensing Policy (NELP) 5, when it is opened for bidding sometime in the middle of the year, as also in Nepal.
There could also be some outside acquisitions, Linn said. Cairn has invested over $0.5 billion in the country already.
Analysts worldwide have said that the Rajasthan discovery will become a lifeline for Cairn Energy, which is betting on India and Bangladesh over the past few years.
Linn said, "This discovery is important to Cairn's global business. Its importance can be gauged from the way the stock moved after the announcement on Monday."
Cairn expects the Rajasthan block can be brought to commercialisation in three years.
"We expect to go through the regulatory processes and should be ready for development of the block as soon as possible," he said.
The commercialisation process is also controlled to a large extent by the product-sharing contract.
As per the agreement with the government, public sector Oil & Natural Gas Commission has a right to 30 per cent of any development area resulting from commercial discovery on the block.
ONGC executives said the company will exercise its right to take a 30 per cent share in the Rajasthan oil field.
On Monday, Cairn announced a significant oil discovery in Rajasthan. Initial estimates by the company for the oil in place of this discovery is in the 450 million to 1,100 million barrels range, while preliminary reserves estimates, or the amount of oil that can be realised, is in the 50-200 million barrels range.
Cairn is involved in extensive exploration across a 5,000 square kilometre block in Rajasthan. But it has yet to declare any of its finds commercially viable.