Date:04/07/2006 URL: http://www.thehindubusinessline.com/2006/07/04/stories/2006070404220200.htm

Back IFC clears $150-m loan to Cairn for Rajasthan project

Our Bureau

To alleviate energy shortage in India, Bangladesh

New Delhi , July 3

International Finance Corporation (IFC), the private sector lending arm of the World Bank, said on Monday that it has signed a loan agreement for extending $150 million to UK-based oil company Cairn Energy PLC to help alleviate India and Bangladesh's energy shortage. IFC's 9-year term loan is part of a $1 billion credit to the company from commercial banks that will finance development of oil fields in Rajasthan, it said.

With a target peak production of around 150,000 barrels per day, the Rajasthan development would equal around 25 per cent of India's current oil production and about eight per cent of its current oil imports, it said. "With our investment, we are supporting the local economy and helping to satisfy India's demand for domestically produced fuel," Mr Iyad Malas, IFC's Director for South Asia, said in a statement.

"This project is aligned with the Government's objective of securing reliable future energy supplies," Mr Bill Gammell, Chief Executive of Cairn Energy added.

In March, Cairn announced an increase in estimates of reserves at the oil explorer's main fields in the Rajasthan basin, alongside news of a return to profitability in 2005.

It said its oil reserves estimates for the entire Rajasthan basin were in excess of 3.5 billion barrels of oil. That compared with a previous estimate of about 2.5 billion barrels.

Proved and probable reserves estimates for the northern oil fields, Mangala, Bhagyam and Aishwariya, were also raised by 21 per cent to 606 million barrels.

However, Cairn delayed the start-up of the Mangala field, India's largest discovery in over 20 years, to 2008 from end-2007.

The company also operates Bangladesh's only offshore gas field at Sangu in the Bay of Bengal.