Huge Rajasthan oil find, UK firm and ONGC strike it rich

Cairn said Oil & Natural Gas Corp (ONGC) had a right to 30 percent of any development area resulting from a commercial discovery in the block. The discovery was made in a large simple onshore structure at shallow depths. The company said the well, 60 km north of its Saraswati oil field, was currently at a depth of 1,250 metres and had not yet reached the planned total depth. ‘‘Once the well has reached total depth, a test programme is planned to confirm reservoir deliverability, after which further announcements will be made,’’ Cairn said. The British company, which has its roots in the North Sea but is now increasingly focused on India and Bangladesh, said initial estimates of the find ranged from 450 million to 1,100 million barrels. Preliminary reserve estimates — the amount of realisable oil — were in the 50-200 million barrel range, the firm said.

Analysts said the discovery had the capacity to more than double the company’s reserve base, and with up to two similar prospects in the vicinity yet to be drilled, the region offered further exploration potential.

Cairn is involved in extensive exploration across a 5,000 square kilometre block but until now had yet to declare any of its finds commercially viable.

‘‘(The discovery) further cements the fundamental attraction in the business, which is that it is focused and positioned on the Indian subcontinent. And if you buy into the emerging industrialisation of India, it’s a very attractive position,’’ said Mike Felton of ISIS Asset Management.

‘‘Even at 50 million barrels, it is enough to kickstart commercial development. It’s great news for the company and looks very encouraging… It looks like this could be a company-maker,’’ said Cheuvreux analyst Peter Hitchens, who rates the company stock as ‘‘outperform’’. Merrill Lynch raised its rating on the stock to ‘‘buy’’ from ‘‘neutral’’ saying the find was potentially one of the most significant in Cairn’s and India’s history. (Reuters)