THE Utarlai military airfield in northwest India is deceptively tranquil. Nestling strategically in Rajasthan’s sandy desert, it is just 55 miles (90km) from the border of hostile Pakistan. Rocket launchers point westward and fighter jets are hidden in camouflaged bunkers.

However, as well as its role as a defensive shield, Utarlai is playing a key part in addressing India’s chronic shortage of oil and gas reserves.

Less than 19 miles east of Utarlai lies the Mangala oilfield, discovered last year by the Edinburgh-based Cairn Energy. Cairn’s discovery was one of the world’s biggest oil strikes in 2004, and India’s biggest in 22 years.

Such was the excitement caused in India by Cairn’s discovery that the company is allowed to fly into Utarlai. Indian mobile phone companies have extended their coverage to this hitherto ignored region. Both advances will come in handy next week when Cairn hosts a site visit for 30 UK fund managers and analysts.

The discovery of oil at Mangala single-handedly catapulted Cairn from relative obscurity into a FTSE 100 company, poured further mockery on Royal Dutch Shell at the time of its reserves scandal — the Rajasthan block was originally Shell’s, but was relinquished to Cairn three years ago — and gave India’s Government confidence that it could attract other foreign companies to help to exploit the country’s untapped oil and gas riches.

Today there is not much to see at the Mangala drill site. Locals lead their camels, ladden with supplies, past the fenced-off development, while in the distance goats feed on the few bushes that can survive in this dry climate.

The Mangala well is capped as it awaits the development of a processing plant and pipeline to allow oil to be pumped from about 1,000m (3,280ft) below the surface to refinery customers several hundred kilometres away. Cairn is waiting for Oil and Natural Gas Corp (ONGC), India’s energy giant, which has a 30 per cent stake in the Mangala oilfield (which also includes the nearby Aishwariya and Bhagyam finds), to sign off development plans that will allow production of more than 150,000 barrels of oil a day from 2008.

Despite ONGC grumblings about having to pay royalties on 100 per cent of Mangala production, despite owning only 30 per cent, Cairn expects all approvals by the end of the year.

Given that India imports about 70 per cent of its daily consumption of 2.6 million barrels, Mangala’s contribution will play a key role in safeguarding the country’s future economic growth. Government officials have expressed support for the Mangala development, and Cairn wants the $750 million (£437 million) project to start as soon as possible.

A subsequent series of discoveries — Mangala remains the biggest find — have suggested that Cairn’s Rajasthan block contains more than 2.5 billion barrels. Proven and probable reserves are already as high as 715 million barrels, but further drilling could significantly boost that figure.

Bill Gammell, chief executive of Cairn and a former Scotland rugby international who counts Tony Blair and George W. Bush among his friends, has a reputation as an asset trader, and Mangala’s attractiveness to a foreign oil major seeking a foothold in India is clear.

Mr Gammell has repeatedly dismissed speculation that he is seeking a sale of the Mangala fields, but this week he floated the possibility that the Rajasthan assets could be spun off into a separately listed entity.

In the meantime Mike Watts, Cairn’s exploration director and the man credited with identifying Rajasthan’s potential, is scouring the desert block for more oil. Only on Tuesday, drilling began at a new site to the west of the Mangala discovery.

Potential bidders for Mangala, or Cairn in its entirety, are unlikely to declare their interest until oil production is under way. India will want to protect this Cairn-developed national treasure, and Rajasthan’s locals are already rejoicing at the improved infrastructure and employment opportunities that are coming their way.

RAJASTHAN RECORD

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