Cairn to start Rajasthan production this week

25th Aug 2009 07:04

Cairn Energy fell into the red during the first half of 2009 and saw revenue slump by $100m, but the oil and gas group is over the moon as production is due to begin in Rajasthan this week.The company reported a loss after tax, but before exceptional items, of $20m for the six months to 30 June versus a $17m profit a year ago. There was a one-off item of $55m for the Ravva arbitration.Revenue sank to $81m from $180m in the first half of 2008. Cairn blamed the natural decline in gross production levels from existing producing fields combined with lower realised prices.Gross operated production dropped to 68,941 barrels of oil equivalent per day (boepd) from 80,873 boepd a year earlier. Average net entitlement production was down 17% to 11,573 boepd.But a huge fanfare is expected at a Government of India inauguration ceremony this week when the company starts production from Mangala in Rajasthan, North West India, just five years after discovery.When Mangala is joined by the Bhagyam and Aishwariya fields, production is expected to rise to at least 175,000 barrels of oil per day. 'We believe there is substantial scope for further growth from the existing fields, from Enhanced Oil Recovery and the expansion of the resource base,' said Cairn boss Bill Gammell.The firm also has interests in Greenland. 'We firmly believe that Greenland's hydrocarbon potential can provide the next stage of the Cairn growth story and we continue to target first exploration drilling in 2011.' Gammell added.