(Bloomberg) -- Billionaire Anil Agarwal plans to invest $5.9 billion over the next three years across his oil production and metals businesses in India, predicting a positive turn in the commodity cycle.
Cairn India Ltd., the nation’s largest onshore crude producer, will invest $4.4 billion to increase output by as much as 250,000 barrels a day of oil and gas from around 200,000 barrels currently, said Agarwal, chairman of London-listed parent Vedanta Resources Plc. It aims to contribute half of India’s domestic oil output, he said. The South Asian economy’s biggest base metals company Vedanta Ltd. will invest $1.5 billion, according to Agarwal.
The spending comes as the International Energy Agency expects India to be the fastest-growing oil consumer through 2040, adding urgency to Prime Minister Narendra Modi’s push to reduce a dependence on fuel shipments. The $2-trillion economy imports more than 80 percent of its crude needs. Agarwal is in the process of combining Cairn and Vedanta to create an Indian resources heavyweight to compete with the likes of BHP Billiton Ltd., with the transaction expected to be completed by the end of March.
“India has a lot of hydrocarbon and we want to produce more oil and gas in India,” Agarwal said. “We have explored only 10 percent of our resources and we have better resources than even China. We hardly produce anything.”
Oil prices will be around $50 a barrel after the Organization of Petroleum Exporting Countries reached a deal to reduce output targets, Agarwal said. Brent crude traded at $53.95 a barrel at 4 p.m. in Singapore, after gaining 15 percent last week in its biggest weekly advance since January 2009.
Cairn expects to soon get approval for a 10-year extension for a block in the northern state of Rajasthan, with plans to increase oil and gas production by 100,000 barrels a day each, Agarwal said. The company wants the government to allow it to charge international prices for crude from the block, he said.
“We will be looking how we can partner people on the technical side, who can help us develop our resources, to develop our gas reserves,” Agarwal said. “We are open to partner with big oil companies. We have no serious talks at the moment.”