Cairn Energy meets India government to clear Vedanta deal

17th August 2010, Comments 0 comments

Top executives from Britain's Cairn Energy met Indian government officials Tuesday to seek approval of its plans to sell a controlling stake in Cairn India to Vedanta for up to 9.6 billion dollars.

Cairn Energy chief executive Bill Gammell flew to New Delhi to meet Oil Minister Murli Deora and other officials to discuss implications of the deal involving the British company's India unit, the Press Trust of India reported.

British-based Vedanta Resources announced Monday it would buy a controlling stake in Cairn India for up to 9.6 billion dollars (7.5 billion euros), adding to its assets that already include aluminium, copper, iron ore and zinc mines.

India-focused Vedanta, in its first foray into the energy sector, said it would buy 51-60 percent of Cairn India for 8.5-9.6 billion dollars (6.7-7.5 billion euros).

Last week, the Press Trust of India quoted an unnamed government source as saying New Delhi would take its time in giving its approval for the sale by Edinburgh-based Cairn Energy.

The transaction requires the Indian government's approval because it has production-sharing contracts with Cairn India.

Cairn India, the country's fourth-largest oil and gas company, owns a 70 percent stake in the Mangala oil field in the prolific Rajasthan block where the rest is held by state-owned Oil and Natural Gas Corp.

Billionaire tycoon Anil Agarwal, who controls Vedanta, has expressed confidence in winning approval from the Indian government to create an "Indian natural resources champion."

Cairn Energy, which holds 62.4 percent of Cairn India, said the sale would allow it to return cash to shareholders and provide it with funds to push on with its drilling programme in Greenland.

Cairn Energy has said it aims to keep a residual interest of up to 22 percent of the fully diluted share capital of Cairn India after a deal has been concluded.

Cairn Energy began to pump crude in Rajasthan in August last year. It bought the field in 2002 from Anglo-Dutch giant Shell, which had concluded it contained no major reserves. Two years later, Cairn struck oil.

© 2010 AFP

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