Britain's Cairn Energy and Reliance Industries will start commercial oil and gas production from their exploration blocks by the third quarter of 2007, considerably enhancing India's indigenous production.

"While Cairn Energy would be producing about 125,000 barrels per day of oil from their Rajasthan block, Reliance has been directed to start commercial production of gas - estimated to be 40 million standard cubic metres per day (MMSCMD)- by August 2007," V. K. Sibal, director general of the Directorate General of Hydrocarbons (DGH), said here Friday.

In its first appraisal of exploration activity in the country four years after work started on the blocks awarded under the New Exploration Licensing Policy (NELP), state-run DGH gave top scores to companies like Cairn Energy, Reliance, Canada's Niko Resources and Gujarat State Petroleum Corporation.

With India depending on imports for 70 percent of the domestic crude demand and facing a 50 percent shortfall in indigenous gas supplies, the new exploration activities hold promise of reducing the growing demand and supply gap.

Authorised to oversee all hydrocarbon upstream activities in the country, DGH estimates so far $8 billion has been invested in exploration activities under NELP since 2000.

"Under the NELP product sharing contracts 71 wells have been drilled so far. Out of these, 37 wells have been successful in terms of striking hydrocarbons. The success ratio of about 50 percent is very encouraging," said Sibal.

These discoveries, some of which are still being appraised for commercial exploitation, have helped to double India's exploitative reserves in the last four years from 1,245 million barrels to 2,500 million barrels, the official said.

Reliance has established around 20 trillion cubic feet of gas reserves in four of the 17 wells drilled so far in its gas-rich Krishna-Godavari basin block.

"The company has submitted a $2.47 billion development plan for commercial exploitation of Dhirubhai 1 (D1) and D3 fields. In addition Reliance has submitted proposals for commercial appraisal of D2 and D6 fields," said Sibal.

The further assessments by June are expected to possibly even double the gas reserves estimates in the KG Basin, which is attracting a lot of global interest.

In the case of Cairn Energy, the company has submitted a draft plan for commercial exploitation of mainly Mangala and Aishwarya fields in its Rajasthan block with an investment of $1.33 billion over a two-and-a-half period.

"While Cairn's initial estimates are of 125,000 bpd of oil production from mid-2007 till possibly 2040, there is potential for it to peak to 150,000 bpd," said Sibal.

In sharp contrast to the performance of the private sector players, the first quarterly appraisal made public by DGH shows dismal performance by state-owned Oil and Natural Gas Corporation (ONGC).

Of the 10 wells drilled by ONGC, which currently accounts for over 70 percent of the domestic oil and gas production, only one well under appraisal has provided signs of hydrocarbon. The other nine wells, each drilled at a cost of around Rs.500 million, have turned out to be dry.

--Indo-Asian News Service