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Monday, October 09, 2006

IFC considering $45mn equity investment in Cairn India

International Finance Corporation, IFC, the private lending arm of the World Bank, plans to invest upto USD 45 million in equity in Cairn India. IFC on its website said: "IFC is considering an equity investment in Cairn India in the form of ordinary shares of upto USD 45 million equivalent”, reports The Hindu Business Line.

Equity participation

Cairn India, a wholly owned subsidiary of the Scottish major Cairn Energy, is planning an initial public offer of upto 50% equity shares later this year. Following the IPO, the parent is expected to remain a significant shareholder in the company.

According to sources, the percentage of equity participation of IFC is yet to be worked out. This proposal by IFC would be over and above the USD 1 billion loan the corporation is extending to Cairn with 13 other banks and financial institutions for development in Rajasthan oilfields.

Cairn recently said that it plans to begin oil production from its Rajasthan blocks in early 2009.

The company expects an output of 150,000 barrels per day. ONGC has a 30% stake in an oil and gas block in Rajasthan, where Cairn Energy holds the remaining stake and is the main operator.

Cairn India's primary asset is 70% working interest in a development area in Rajasthan. In January 2004, it discovered the Mangala oil field.

In addition, Cairn India's key assets include operated interests in producing fields at Ravva in Block PKGM-1 (22.5% working interest) in the Krishna-Godavari Basin offshore Eastern India and at Lakshmi and Gauri in Block CB/OS-2 (40% working interest) in the Cambay Basin offshore Western India. Further, Cairn India has interest in a number of exploration blocks across India. The company's medium term capital expenditure program will focus primarily on Rajasthan and is expected to comprise additional exploratory, appraisal and development drilling as well as the construction of oil and gas processing and export facilities.

It will also include a component covering further exploration and development in currently producing fields as well as exploration in non-producing fields.

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