Cairn discovers gas in offshore Greenland amid protests

24th August 2010, Comments 0 comments

Scottish exploration group Cairn Energy said Tuesday it has discovered gas in offshore Greenland, amid environmental protests by Greenpeace to stop its operations near the nation's fragile coast.

Cairn revealed the discovery alongside news of a return to profit in the first half of 2010 while uncertainty over its recent deal to sell a majority stake in its Indian unit, Cairn India, to mining group Vedanta increased.

Profits after tax stood at 27.7 million dollars (21 million euros) in the six months to June, compared with a net loss of 76.1 million dollars in the same part of 2009, Cairn said in a results statement.

Cairn said it has "encountered gas" at its first well in Baffin Bay, offshore Greenland, with indications that there may be other hydrocarbon resources in the area.

"I am encouraged that we have early indications of a working hydrocarbon system with our first well in Greenland, confirming our belief in the exploration potential," chief executive Bill Gammell said.

Greenpeace activists on Monday arrived in the Arctic on board one of its ships to pressure Cairn to stop operations in offshore Greenland, which is home to blue whales, polar bears, seals and migratory birds.

"Cairn might be a step closer to finding oil off Greenland, but this takes us one step back in the fight against climate change," said Greenpeace campaigner Leila Deen, speaking on board the ship Esperanza.

The development "poses a grave threat to the fragile Arctic environment," added the activist.

The campaign group said Cairn had refused to publish a "comprehensive plan" of how it would deal with a spill from the platform and claimed the exploration firm had just 14 vessels capable of reacting to a spillage.

But Cairn, which is drilling two wells off the west coast of Greenland, responded that it complies with "some of the strictest regulations in the world" that are laid down by the Greenland government.

A spokesman for the firm said it had put "procedures in place which place the highest possible priority on safety and environmental protection".

News of the Greenland find comes one week after Vedanta agreed to pay up to 9.6 billion dollars for a 51-60 percent stake in Cairn India, whose biggest asset is the massive Mangala oil field in the western state of Rajasthan.

Cairn Energy, based in Edinburgh, hopes that the Vedanta deal will provide fresh funds for the drilling programme in Greenland and allow it to return cash to shareholders.

The Vedanta transaction is in the balance, however, as Indian media report that the country's state-run fuel companies may bid for Cairn India assets.

The Press Trust of India reported Monday that state-run companies Oil and Natural Gas Corp (ONGC), OIL India Ltd (OIL) and GAIL have already lined up 10 billion dollars in loan commitments from international banks for a possible counter-bid for Cairn India.

The three firms have held informal talks as Indian authorities examine legal options to deny Cairn approval for conclusion of its sale, PTI said, quoting sources with knowledge of developments.

The report came as India's Oil Minister Murli Deora said the government was still undecided on whether to push for a state takeover of the Indian oil assets owned by Cairn Energy.

Despite the fast-moving newsflow on the Vedanta deal, Cairn Energy's interim results statement was "all about" Greenland, according to Davy Stockbrokers analyst Job Langbroek.

"Cairn's interim results were all about the first well (in) offshore Greenland," he said.

"The reality, however, is that there is simply not enough information to radically alter the outlook or prognosis for west Greenland at this stage."


© 2010 AFP

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