Cairn India sees $3bln cash flow per year

By Prashant Mehra

MUMBAI (Reuters) - Cairn India Ltd (CAIL.BO), which expects to start production from its oil field in western India by 2009, sees operating cash flow of $3 billion a year at a crude price of $100 a barrel, its chairman said on Wednesday.

The explorer, a unit of UK's Cairn Energy Plc (CNE.L), plans to invest $2 billion, almost double the spend so far, over 18 months on its exploration and pipeline programme, Bill Gammell told shareholders at an annual general meeting.

Cairn India, which aims to to hit production of 175,000 barrels per day in the desert state of Rajasthan by 2010, is on track to start production at the Mangala oil field by the second half of 2009, he said.

The company plans to start field trials for enhanced oil recovery next year through which it hopes to increase output by 300 million barrels over the life of its Rajasthan fields, Gammell said.

"We are trying to have a portfolio of opportunities and cash flows from these assets will sustain the business," Chief Executive Rahul Dhir said.

With oil prices expected to stay firm, every $20 rise would push up cash flows by $500 million, Gammell told shareholders.

"Supply is getting very tight and demand in Asia is growing. Given the growth in infrastructure, demand here will continue to be strong," he said.

Crude oil prices CLc1, which have nearly doubled in the last one year, are currently trading close to their peak, at above $137 a barrel.