gas discovery/block extension

Cairn Energy PLC
11 January 2005


FOR IMMEDIATE RELEASE
                                                                 11 January 2005

                                CAIRN ENERGY PLC

               NEW GAS DISCOVERY AND BLOCK EXTENSION - RAJASTHAN
                                   RJ-ON-90/1

Raageshwari-5 Gas Discovery

Cairn has made a new gas discovery with the Raageshwari-5 well currently
operating 75 km south of Mangala, in the southern part of the Rajasthan Basin.

This gas discovery is in a conventional reservoir in the Fategarh formation
whereas the previously encountered Raageshwari gas has been in non-conventional
volcanic reservoirs. The well, which has been drilled to a depth of around 3,000
metres, will be tested once drilling operations are completed.

An appraisal well will be required to determine the reservoir extent and size of
the gas column before a volumetric assessment of the new Raageshwari discovery
can be made.

The discovery is encouraging both for establishing larger gas volumes at
Raageshwari but also for future exploration elsewhere in the southern part of
the basin.

Bill Gammell, Chief Executive said:

'The initial evaluation of this Raageshwari Fategargh gas discovery is
encouraging but further evaluation and appraisal work will be required before
understanding its full significance.'

Block Extension

Cairn has also secured a further exploration area, as an extension to its
existing onshore acreage in Rajasthan in North West of India.

The Company has received approval from the Indian Government to explore for oil
and gas in a further 856 square kilometres extension of the block to the North
West of the recent NV discovery. The extension runs until the middle of May
2005.

Cairn will immediately conduct a seismic survey and drilling in the area once it
has received all the necessary permissions from the Rajasthan State Government.

Bill Gammell, Chief Executive said:

'We are pleased to have received approval for the extension.'

Enquiries:

Cairn Energy PLC

Analysts

Bill Gammell, Chief Executive                              Tel: [phone]
Dr Mike Watts, Exploration and New Business Director       Tel: [phone]
Kevin Hart, Finance Director                               Tel: [phone]

Journalists
David Nisbet, Head of Group Communications                Tel: [phone]
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Brunswick Group LLP                                       
Patrick Handley/Mark Antelme                              Tel: [phone]


Notes to Editors:

   •A series of shallow oil accumulations, Guda, GR-F, Raageshwari oil and a
    deep gas field at Raageshwari, contained in non-conventional volcanic
    reservoir, have previously been encountered on the Central Basin High. The
    Raageshwari-5 well is the first well to be drilled on the flank of the
    Raageshwari gas field and is being drilled for dual objectives. The first of
    which is the appraisal of the gas in the volcanics and the second is for the
    exploration of conventional sands in the Fatehgarh formation.


   •The Raageshwari-5 deviated well has encountered 39m (27m true vertical)
    of net gas pay in good quality sands of the Fatehgarh formation at around
    3,000m, above the volcanics. The Fatehgarh section has been cased off and
    the well will now be deepened by 500 or 600m. It is the intention to then
    conduct a short test in the deeper volcanics before carrying out an extended
    well test in the Fatehgarh sands to assess reservoir quality, deliverability
    and reservoir continuity. A further update will follow in due course.


   •The Fatehgarh section encountered in Raageshwari-5 is similar, although
    thinner, to that seen in Saraswati-2 and the Mangala wells. It has, however,
    been more deeply buried and hence sand porosities are in the 15% rather than
    25% range.


   •Cairn focuses on the geographic region of South Asia, where the Group
    holds material exploration and production positions in both west and east
    India and in Bangladesh along with new exploration rights in Northern India
    and Nepal.


   •This focus on South Asia has already resulted in a number of oil and gas
    discoveries. In particular, the company made a significant oil discovery
    (Mangala) in Rajasthan in the North West of India at the beginning of 2004.

   • Cairn has received formal approval from the Government of India for a
    Declaration of Commerciality in respect of the Mangala, Aishwariya,
    Saraswati and Raageshwari discoveries. The approval secures Cairn an
    extensive Development Area of 1,858 square kilometres which also
    incorporates the as yet, un-appraised, GR-F, Kameshwari, N-R and Guda
    discoveries.

   • The Development Area is retained until 2020 with options for further
    extension subject to mutual agreement with the Government of India.


   •The Development Area is the equivalent to the size of 12 North Sea
    Blocks.


   •The Mangala and Aishwariya (formerly N-A field) fields are currently
    scheduled to start production in the final quarter of 2007. Plateau rates
    are currently targeted at between 80,000 and 100,000 barrels per day.


   •India currently imports 2 million barrels of oil a day. It produces
    650,000 barrels a day itself of which 50,000 comes from the Cairn operated
    Ravva field.


   •'Cairn' where referred to in this release means Cairn Energy PLC and/or
    its subsidiaries, as appropriate

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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