Having already invested $2 billion till date, Cairn India plans to invest another $1.2 billion to $1.3 billion in Mangala fields, in which ONGC has a 30 percent stake.

'For the next two years, we are going for $1.5-1.8 billion with our partners, in which our share of the investment is $1.2-1.3 billion,' he said.

He said the government was committed to buy the crude from Cairn India. So far, it has nominated ONGC's Mangalore Refinery and Petroleum Ltd (MRPL) and Indian Oil Corp (IOC) to take the crude from the Mangala fields.

'The output for Mangala will be 125,000 barrels per day. The commitment for fiscal year 2011 is 65,000 bpd. But, we have been reassured by the government that there will no problem on further nominations,' said Dhir.

The operating cost will be $3.5 per barrel excluding transportation cost. But with the pipeline from the fields not yet ready, the initial consignments will be send by truck to MRPL, which will drive up the costs to $12 per barrel.

However, Dhir said that once the 700-km pipeline to Gujarat coast gets operational by the year-end, the total cost of production would come down to $5 per barrel - out of which $1.5 per barrel will be the pipeline transportation cost.