Arbitration Proceedings

Cairn Energy PLC
18 October 2004


EMBARGOED FOR RELEASE AT 0700
                                                                 18 October 2004

                                CAIRN ENERGY PLC

                    Result of Ravva Arbitration Proceedings

Following a recent Arbitration Hearing held in Kuala Lumpur in relation to the
interpretation of the Ravva Production Sharing Contract ('PSC') the arbitration
panel has now issued its award.

The arbitration proceedings were in respect of various disputed items which
directly impact upon the calculation of Cairn's and the Indian Government's
respective share of the past production from the Ravva oil field in the state of
Andhra Pradesh in India.

Whilst the panel found in Cairn's favour with regard to the major item of
dispute it also endorsed the Government's stance on a number of less material
issues. As a consequence, it is likely that the Government's share of production
in certain prior fiscal years will increase and that Cairn will be required to
reimburse the Government for production it was entitled to.

The award made by the panel was in respect of law only. Cairn and the Government
of India will now have until April 2005 to try to agree the amount owing to the
Government.

Cairn is now considering its legal position. However, it is likely that the
outcome will result in the amount owing to the Government of India exceeding the
sum of $6.9 million which reflects the amount provided in Cairn's accounts to
date.

Kevin Hart, Finance Director, said:

'This has been a lengthy but amicable process. Notwithstanding the panel's
findings in relation to certain of the less material issues, we are pleased to
have achieved our primary objective of successfully defending the most
significant point of dispute. We look forward to continuing our strong
relationship with the Government of India.'

Enquiries to:

Cairn Energy PLC:
Bill Gammell, Chief Executive                      Tel: [phone]
Mike Watts, Exploration Director                   Tel: [phone]
Kevin Hart, Finance Director                       Tel: [phone]
David Nisbet, Group Communications                 Tel: [phone]

Brunswick Group Limited:
Catherine Hicks, Mark Antelme                      Tel: [phone]

Notes to Editors:

1. From 1st April 2004 the Government has reached its maximum entitlement to 60%
of profit oil and so the arbitration award has no impact on results from that
date.

2. The Ravva Production Sharing Contract was signed with the Government of India
on 28th October 1994.

3. A previous note relating to this issue was released by Cairn Energy on 26th
September 2002.

4. Cairn is the operator of the field on behalf of the Joint Venture. The
breakdown is as follows:

ONGC 40%
Petrocon India Ltd 25%
Cairn Energy India PTY Ltd 22.5%
Ravva Oil Singapore Pte Ltd 12.5%

Ravva accounts for approximately 8% of India's oil production (India's current
production stands at around 650,000 barrels a day with 2 million barrels a day
imported).

5. The Ravva Field has been on production for more than 10 years.

6. Ravva also meets the fuel requirements of some of the gas based power plants
in Andhra Pradesh.

7. The area of the Ravva block (PKGM-1) is 306.8 km2 out of which 24.8km2 is
onshore.

8. As a sole industry located in a remote area Ravva has consistently been
contributing to community development.

There are matters discussed in this media information that are forward looking
statements. Such statements are only predictions and actual events or results
may differ materially. For a discussion of important factors which could cause
actual results to differ from the forward looking statements, refer to the
Company's annual report and accounts for the year ended 2003.




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