Cairn Seeks India Approval to Sell Stake in 3 Assets
MUMBAI (Dow Jones Newswires), Nov. 26, 2010
Cairn has sought the Indian government's permission to transfer the U.K.-based explorer's stake in three key oil and gas blocks in India to Vedanta, Oil Minister Murli Deora said Friday.
The application is to transfer the production blocks allocated to the company before India started auctioning oil and gas blocks under its New Exploration Licensing Policy in 1999, Deora told reporters.
Cairn Energy's move may help the proposed sale of its majority stake in Cairn India to London-listed Vedanta, a process that has been prolonged for months as India's oil ministry says the sale needs its approval as it would involve a change in ownership of the exploration blocks.
Mining conglomerate Vedanta--controlled by Indian billionaire Anil Agarwal--and Cairn Energy said on Aug. 16 that Vedanta would buy up to 60% of Cairn India for as much as $9.6 billion.
Cairn Energy, which owns 62.36% of Cairn India, holds stakes in 10 oil and gas blocks in India through its local unit.
But state-run Oil & Natural Gas Corp. has also asserted its pre-emptive rights over some blocks and has raised questions about Vedanta's expertise in the oil and gas industry.
In October, ONGC requested Cairn Energy "to provide it with full details" of the proposed deal with Vedanta and "the details of the proposed buyers' financial strength, technical capability and past experience in the field of oil and gas."
Oil minister Deora said he expects more clarity on the Cairn-Vedanta deal after Dec. 5, but he didn't say why that date was significant.
Cairn Energy Thursday sent a circular to Vedanta shareholders "in connection with the proposed part sale of Cairn's shareholding in Cairn India to Vedanta."
It said a meeting of Vedanta shareholders will be held on Dec. 13 in London, but it didn't provide details of the meeting's agenda.
Cairn India's key producing asset in India is the RJ-ON-90/1 oil block in Barmer in the northwestern state of Rajasthan. The block's production of 125,000 barrels a day accounts for about 17% of India's total crude output.
Cairn India owns a 70% stake in the Barmer block, while ONGC holds the remaining 30%.
Cairn India also owns a 40% stake in a block in the Cambay basin off the west coast of India and another 22.5% stake in Block PKGM-1 of the Ravva oil and gas field in the eastern offshore Krishna-Godavari basin.
ONGC holds 40% of the Ravva block, while Videocon Industries and Ravva Oil (Singapore) own 25% and 12.5%, respectively.
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