Oil India Ltd. (533106.BY) plans to raise its domestic natural gas production by about two-thirds to 10 million metric standard cubic meters a day by March 2013 to meet growing demand for the cleaner fuel, its finance director said Tuesday.

"We are investing INR5 billion ($112 million) to INR6 billion to increase production," T.K. Ananth Kumar told Dow Jones Newswires.

The state-run oil and gas explorer produced around 6 mmscmd of natural gas, or about 4% of India's total production, in April-August from its fields in Assam, Arunachal Pradesh and Rajasthan states, according to government data. Natural gas sales contributed about 6% to the company's net sales of INR79.06 billion during the last financial year ended March 31, its website showed.

Kumar said Oil India seeks to increase production by additional drilling at its north-east fields.

Prayesh Jain, an analyst at Mumbai-based India Infoline, said in a note last month that the explorer hasn't focussed on increasing its natural gas production due to a lack of demand in India's northeastern region.

Oil India's most of the oil and gas producing assets are in the northeastern region, which includes Assam and Arunachal Pradesh.

With the nationwide rise in demand and increased availability of transportation infrastructure, Oil India expects to double its gas output over the next five years, Jain said.

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