Cairn Energy, the independent oil exploration group, disclosed yesterday that the start of production from its main oilfield in the Rajasthan region of India has been delayed by up to a year.
The company had been due to start pumping oil from the Mangala field, the biggest in the Rajasthan region, in late 2008 but this has now been put back to 2009. The Indian oilfield contains about 3.6 billion barrels of oil, of which Cairn expects to recover at least one billion.
News of the production delay hit Cairn shares and came as the group announced that the £3bn flotation of its Indian operations on the Mumbai stock exchange would take place in December.
The group is planning to float between 25 and 50 per cent of the newly created Cairn India and return most of the proceeds to shareholders. It is also likely to raise new capital for its Indian operations as part of the IPO. A draft prospectus will be published this month, followed by an indicative price range in October and a final pricing in November.
Kevin Hart, Cairn's finance director who is due to take over as chief executive of the Edinburgh-based oil explorer Bowleven after the float, said the delay had been caused by a shortage of skilled labour and services. Cairn is also investigating the possibility of partnering the Indian government in building the pipeline.
Sir Bill Gammell, the chief executive and founder of Cairn, will chair the Mumbai-listed group. Three prominent Indians are to act as non-executive directors: Naresh Chandra, a former Indian ambassdor to the US; Aman Mehta, the former chief executive of HSBC's Asia Pacific division; and Omkar Goswami, former chief economist of the Confederation of Indian Industry.