Starting off at 30,000 barrels per day, the MBA field is expected to scale up to 200,000 in two years, around 10% of India's total oil consumption.
Rajasthan's Mangala-Bhagyam-Aishwarya oil field, India's second biggest oil discovery, went into production on Saturday. Starting off at 30,000 barrels per day, the MBA field is expected to scale up to 200,000 in two years, around 10% of India's total oil consumption. At the peak rate, its production will be equal to around 30% of India's present oil production.
Production started after five years and $2 billion of investment since the discovery of oil in 2004 by Cairn India, the British controlled exploration and production firm, and its partner the Oil and Natural Gas Corporation (ONGC).
Under their contract with the government, Cairn-ONGC will have to sell all their produce back to the government nominees, but the government has so far made arrangements for picking up only about half the estimated production from the field by next year.
All the crude produced this year will be trucked from Rajasthan to the Gujarat coast and from there to the Mangalore refinery at a cost of $10-12 (Rs 500-600) per barrel. Bharat Petroleum Corp (BPCL) and Hindustan Petroleum Corp (HPCL) are also eligible to receive the crude output, but are likely to benefit only after a 700-km pipeline from Mangala to Gujarat is readied by end of the year.
The three fields will require a further investment of $1.8 billion (Rs 8,700 crore) before they reach their peak production, which is expected to sustain for 5-6 years before starting to decline. The total development cost is expected to be around $3.3 billion, compared to $8.8 billion for KG D6.
At a conservative crude price estimate of $50 per barrel, the three fields will generate revenues of Rs 82,000 crore for the government, including Rs 36,000 for the Rajasthan government.
Mangala, Bhagyam and Aishwarya are only the first 3 of the 25 oil and gas discoveries made by Cairn-ONGC in the Rajasthan block. Cairn continues to develop the other 22 discoveries. The crude being produced by the field has been found to be of 'waxy' quality, restricting the number of refineries in India that can be used to crack it into products like petrol and diesel.
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