Cairn tries to make money without spending
Cairn India is doing all in its power to make money from increased production at its Rajasthan fields without investing money of its own.
Last month (November) Cairn acting CEO Sudhir Mathur wrote to four major oilfield service providers offering them the opportunity to win production-linked service contracts: Schlumberger, Halliburton, Weatherford and GE (Baker Hughes). Mathur invited them to view data for the Mangala, Bhagyam, Aishwariya, Barmer Hill and Raageshwari Deep Gas oil and gasfields within its Rajasthan block RJ-ON-90/1 plus the KG-OSN-2009/3 exploration block where Cairn has committed six wells.
"Cairn's principle is simple," reports a source. "It doesn't want to invest its own money at these fields.
Service providers will have to study the data and suggest ways to increase production by investing themselves. Exploration risk for KG offshore block KG-OSN-2009/3 will also be the responsibility of service providers." Contacted by this report, a Cairn source confirms it chose this model on a suggestion from the Boston Consulting Group.
"Whether it can be implemented or not is yet to be seen," he says. "Still early days.
Service contracts will be linked to production enhancement." Cairn asked service providers to make presentations to management in Houston between December 12-14. "All of us are going," says an invited service provider.
"This will be our first trip to understand what Cairn wants."