Cairn Energy in talks to sell stake in India arm

Scottish oil explorer Cairn Energy Plc today said it is in talks to sell stake in its Indian unit, Cairn India, which owns the massive Rajasthan oilfields.

Though Cairn Energy did not identify the suitor, speculation is rife that it could be India-focused miner Vedanta Resources Plc.

"The board of Cairn Energy Plc confirms that discussions are taking place with a third party in respect of the disposal of an interest in Cairn India Ltd," the London-listed firm said in a brief press statement.

A Vedanta spokesperson declined to comment. Cairn Energy holds 62.36 per cent stake in Cairn India.

"There can be no certainty the contemplated disposal will occur or as to the terms of any such disposal," the statement said. "A further announcement will be made when appropriate."

If it is successful, Vedanta will be the only second large miner in the world after BHP Billiton to have interest in oil.

Vedanta has iron ore, zinc and copper mines.

Cairn India shares closed with a 2.41 per cent gain at Rs 340.60 on the Bombay Stock Exchange.

Sir Bill Gammell-run Cairn Energy may retain a controlling interest in Cairn India even it sells up to 12 per cent interest for Rs 7,741 crore at today's closing price.

The talks are advanced and billionaire Anil Agrawal- controlled Vedanta may be discussing a range of options, including an equity stake, asset purchase or a complete takeover of Cairn India.