Cairn Energy gives in to govt demand

Seeks nod to transfer 3 properties.

More than three months after the $8.48-billion Cairn-Vedanta deal was announced, Cairn Energy Plc today sought government permission under three production sharing contracts (PSCs) to sell its stake in Cairn India.

With the company giving in to the government demand and seeking requisite approvals, the deal is likely to pass the muster of both the petroleum ministry and market regulator Securities and Exchange Board of India (Sebi).

Petroleum Secretary S Sundareshan confirmed the development.

He told Business Standard the ministry might take about two months to review the PSCs and give requisite permission.

In September, the UK-based company sought permission under seven of the 10 PSCs.

Cairn is selling 40 to 51 per cent stake in Cairn India, the operator of the nation’s largest onland oilfield, to London-listed Vedanta for $6.65 billion to $8.48 billion.

The deal was announced on August 16.

However, the company’s application to the ministry seeking permission of stake sale in September had left out three producing assets, including the prolific Rajasthan oilfields.

Cairn had maintained it was not contractually bound to seek approval for sale of shareholding in the Indian unit in the Rajasthan block, the Cambay basin gas field and the eastern offshore Ravva oil and gas fields.

Cairn had maintained that only blocks awarded under the New Exploration Licensing Policy (Nelp) required prior government consent for transfer of control, while pre-Nelp areas like the Rajasthan oilfield did not have such provisions.

The government, however, insisted that Cairn would have to apply separately for all its 10 properties in the country for which it had signed individual PSC with the petroleum ministry.

The open offer by Sesa Goa, a subsidiary of Vedanta, to acquire 20 per cent shares of Cairn India has also got delayed pending Sebi approval.

The open offer was to commence on October 11.

The petroleum ministry had informed Sebi that the deal was contingent upon government approvals under the PSC.

Cairn India’s Barmer block produces 125,000 barrels a day.

Cairn is also operator of the Ravva oil and gas field and Cambay Basin (CB/OS-2) which produce 37,043 and 13,527 barrels of oil equivalent per day.