The three fields, which have proven oil reserves, are expected to produce 175,000 barrels of oil a day. Last week, the company started construction of a 600-km heated oil pipeline to transport the "waxy" crude oil from its fields in Barmer (Rajasthan) to Salaya (Gujarat).

After the company's annual general meeting in Mumbai, Rahul Dhir spoke to Kalpana Pathak on the company's plans for exploration and the revenues it would earn from the oilfields. Excerpts:

Would you elaborate on the company's exploration plans?

We are spending about Rs 420 crore ($100 million) a year for exploration. We will invest Rs 8,400 crore (Rs 84 billion) to develop oilfields in Rajasthan and build a pipeline over the next 18 months.

While we will start production at the Mangala oilfield by the second half of 2009, output from the Bhagyam and Aishwariya fields is scheduled to begin in 2010. Other investments will be towards offshore blocks that we won in NELP-VI in Kerala and Tamil Nadu.

At present, we are doing seismic work there. In the near future, our interest lies in the Ganga Valley block in Bihar, where we will start drilling by the end of the current year or early next year.

We are also bullish on our drilling projects with Oil and Natural Gas Corporation in KG basin along with onshore activities.

How do you see the revenue flowing from the Rajasthan oilfields?

The revenues depend on the oil price. Our job is to deliver on volume growth at a low cost so that we focus on cash flows.

We expect an operating cash flow of Rs 12,600 crore (Rs 126 billion) a year at a crude oil price of $100 a barrel. With margins being elastic, for every $20 a barrel rise, the cash flow will increase by about Rs 2,100 crore ($500 million).

Have you zeroed in on a buyer for the crude oil from Rajasthan?

We have an obligation to sell through the government, which nominates buyers. The theory so far has been that the government nominates public sector undertaking refiners.

So we have focused our efforts on discussion with them. So far, we have had discussion with Mangalore Refinery and Petrochemicals [Get Quote] (MRPL) and would be selling oil to them. We are also in discussion with other PSU refiners.

What's your growth strategy?

Our strategy is to have a portfolio of opportunities in the short as well as the long term, where we have current cash flow coming from the Ravva and Cambay basins.

We have a dramatic increase in production and cash flow from Mangala, followed by Bhagyam and Aishwarya fields in Rajasthan, with the implementation of enhanced oil recovery techniques.

We are looking to sustain and build on that and then exploration is going to add to the reserves and growth in the longer-term strategy of the company.

Will the current economic situation in the country impact Cairn's growth?

Volume-wise, we will grow by a factor of almost six times between now and 2010. Operating cash flow-wise, without taking into account the oil prices, we will grow by a factor of ten.

A lot of our growth is driven by investment in infrastructure. We are pretty well funded for our development and confident about our growth even in these times.