Will meet contractual obligations: Cairn to Oil Ministry
Press Trust of India / New Delhi Aug 27, 2010, 15:36 IST
UK's Cairn Energy has informed Oil Ministry that it will comply with all contractual obligations in selling majority stake in its Indian arm and that London-listed Vedanta Resources was a fit candidate to take over operations.
"Cairn Energy has replied to clarifications we had sought on the Vedanta deal. We are studying it," a top Oil Ministry official said.
The official said the Edinburgh-based firm has stated that it was committed to following the law of the land and will fully comply with all contractual obligations.
Cairn Energy is selling a majority of its 62.37 per cent in Cairn India - the company that found the nation's largest onland oilfield, to billionaire Anil Agarwal-controlled Vedanta for up to $9.6 billion.
"The company has acknowledged that contracts for some of the oil blocks Cairn India holds, require consent of the Government to be taken in the event of a change of control," the official said. "It has told us that it is committed to complying with all such contractual obligations."
Cairn Energy said the proposed sale of majority stake "will not adversely affect the performance or obligations under the various Production Sharing Contracts (PSCs) nor be contrary to the interests of India."
Vedanta Resources, it said, had the wherewithal to takeover the parent company guarantees that Cairn Energy had given for performance of obligations under PSCs. Vedanta is the world's fifth largest mining company had 10 times better financial capabilities than Cairn Energy Plc.
Also, Vendata has promised continuity in operations at Cairn India, which will remain independent and its management team and organisation, Cairn Energy said.
Uncomfortable with a non-oil company taking over Cairn India, the Oil Ministry had on August 19 written to Cairn Energy Plc stating that certain PSCs have parent company guarantees and some PSCs have explicit provision of prior government consent in case of change of ownership.
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UK's Cairn Energy has informed Oil Ministry that it will comply with all contractual obligations in selling majority stake in its Indian arm and that London-listed Vedanta Resources was a fit candidate to take over operations.
