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Cairn Energy makes further progress in Rajasthan as average oil production reaches 15,430 bopd in Q4

In a pre-close trading update ahead of its full-year results, Cairn Energy said (LSE: CNE) operations at the Mangala Processing Terminal (MPT) in Rajasthan produced an average of 15,430 barrels of oil per day (bopd) in the fourth quarter ended 31 December 2009, and it is currently producing 20,000 bopd.

The FTSE100 oil company said in Greenland, the two rigs it contracted during the year have greatly increased  its  operational capability and flexibility as it plans to drill up to four exploration wildcat wells in the Baffin Bay Basin,  offshore Disko West.

"The delivery of the Rajasthan project with its significant long term production potential underpins the growth  strategy of Cairn”, said chief executive Sir Bill Gammell, “we plan to commence our multi-well exploration campaign in West Greenland during the summer of 2010.  I also look forward to continuing our exploration  drilling activities across other highly prospective parts of Greenland in subsequent years."

In Rajasthan the MPT began production in August 2009. It is designed to process crude oil from the Mangala, Bhagyam and Aishwariya (MBA) fields and once completed it will have the capacity to process 205,000 bopd. Construction and development work is continuing, the pipeline section from MPT to Salaya has been laid and commissioning is in progress. The construction of processing trains Two and Three is ongoing. Upon completion, which is expected by the end of H1 2010, the additional production trains will enable MPT to attain capacity of 125,000 bopd.

According to Cairn, the Mangala development drilling is on schedule, with 45 development wells drilled to date, of which 33 have been completed as producers to support the future ramp-up in production. The well results confirm the quality, extent and high deliverability potential of the Fatehgarh oil reservoirs, Cairn said.

Cairn has also been discussing potential oil sale agreements with the Government of India, with the aim of aligning it’s near term sales volumes with production capacity. The government agreed for private refiners to qualify as additional candidates for MPT offtake. Cairn successfully agreed to supply Mangala crude to Reliance Industries (RIL) at Jamnagar. The current production is being trucked to the Gujarat coast for shipping to RIL and India’s Oil and Natural Gas Corporation (ONGC) subsidiary, Mangalore Refinery and Petrochemicals Ltd.

Two exploration wells are planned for the Rajasthan basin in 2010. In its exploration projects in Greenland, Cairn has secured two ultra-modern offshore drilling rigs, for its summer 2010 multi-well exploration programme at the previously undrilled Baffin Bay, West Disko. The company has also pre-qualified as an operator for the 2010 exploration bidding round in Baffin Bay, bids are to be submitted by 1st May 2010. In Tunisia the company plans to drill an exploration well on the Louza permit  in H1.

Disclosure: The author holds no positions in the company