Cairn India CEO Rahul Dhir in New Delhi on Tuesday. Picture by Prem Singh

New Delhi, March 23: Cairn India today raised its oil reserve estimate from the Rajasthan block to 6.5 billion barrels, up from an earlier estimate of 4 billion barrels. The subsidiary of the UK-based firm plans to invest $2 billion over 2010-12 to develop the field.

“We estimate that the fields have a potential to produce 240,000 barrels per day (bpd). It is expected to reach the peak production by the end of 2011,” Rahul Dhir, CEO of Cairn India, said. The company had earlier projected a peak output of 175,000 bpd.

Peak output from the Thar desert fields would be next to the production of ONGC’s prime Mumbai High fields in the western offshore.

Mumbai High, the country’s largest oil field, has a total production capacity of approximately 360,000 barrels of oil per day.

Petroleum minister Murli Deora said the increase in reserves augured well for the energy security of the country. “I am told that the peak output from Rajasthan is now estimated at 240,000 bpd and this increased output will help reduce the country’s reliance on imported crude oil to meet its energy needs,” he said.

The new reserve will increase India’s domestic oil production by about 23 per cent in 2010-11. This essentially means that these reserves are very big, analysts said.

During 2008-09, consumption of petroleum products registered a growth of 3.5 per cent to 133.4 million tonnes. India faces a high energy deficit at the current level of oil production of around 660,000 bpd. At present, the country imports 75 per cent of its crude needs.

Imported crude was worth $75.7 billion during 2008-09 compared with $67.8 billion during 2007-08.

At present, Cairn produces 20,000 bpd from the Mangala field in Rajasthan.

It would commission a 600 kilometre Barmer-Salaya pipeline between April and June, following which crude oil output from the Mangala field is expected to go up to 125,000 bpd between July and December.

The main pipeline, which heats the waxy crude to maintain its fluidity, is finished and work on some facilities for customers are nearing completion.

At present, oil is transported by tankers for sale to Reliance Industries and Mangalore Refinery and Petrochemicals Ltd (MRPL).

Besides Reliance and MRPL, Essar Oil buys oil from Cairn.

Dhir said the company had raised the estimates of oil and gas in place in the Barmer fields to 4 billion barrels of oil equivalent (BoE) from 3.7 billion BoE previously. Further, there could be another 2.5 billion BoE yet to be discovered.

He said the company had carried out a comprehensive review of the resource potential in the Rajasthan block. Leading global consultants DeGolyer and MacNaughton also conducted an independent estimate of the reserves and contingent resources, and their projection was in line with the Cairn estimates.

Output from the Mangala fields is expected to ramp up to 125,000 bpd in the second half of this year, and Cairn already has in place agreements to sell 143,000 bpd to customers in the country.