Cairn applies to government for approval of Vedanta deal
More than three weeks after it announced the sale of a majority stake in its Indian arm to Vedanta Resources, UK's Cairn Energy Plc has formally applied to the government for approvals, saying it will meet all contractual requirements needed to fructify the deal.business Updated: Sep 13, 2010 12:35 IST
More than three weeks after it announced the sale of a majority stake in its Indian arm to Vedanta Resources, UK's Cairn Energy Plc has formally applied to the government for approvals, saying it will meet all contractual requirements needed to fructify the deal.
The company, on September 9, wrote separate letters to the Oil Ministry for specific approvals in respect of seven exploration blocks Cairn India had won under the New Exploration Licensing Policy (NELP) rounds and concurrence in case of three producing properties that were awarded to it prior to NELP, including the giant Rajasthan oilfield.
"We have received letters from Cairn and we are examining them. We will decide (on it) in due course," a senior ministry official said.
Attaching a summary of the deal where Cairn Energy is selling a 40 to 51 per cent stake in its Indian arm to Vedanta Resources Group for up to $ 8.48 billion, company Chief Executive Bill Gammell, in the covering letter, stated that the proposed transaction was a sale of shares in Cairn India and "there will be no change in the parties holding the participating interests under the Production Sharing Contracts."
Cairn maintained that only NELP blocks required prior government consent for transfer of control, while pre-NELP areas like the Rajasthan oilfield do not have such provisions.
In respect of the seven NELP areas, including gas discovery block, KG-DWN-98/2, which sits next to Reliance Industries' prolific KG-D6 field in the Krishna-Godavari Basin, Cairn subsidiaries made applications for approval under Article 28.1 of the PSCs signed with the government.
It said the PSCs for pre-NELP Rajasthan block RJ-ON-90/1, the Ravva oil and gas field in the eastern offshore and the Cambay Basin CB/OS-2 gas fields off Gujarat coast "do not require prior consent" of the government.
"Even if there were to be a contractual requirement for seeking prior permission of the government for the transaction, we submit that the present transaction is one that would merit such consent," Cairn said in letters seeking concurrence of the government on the three pre-NELP blocks.
"PSCs that expressly provide for obtaining prior consent also stipulate that the consent would not be unreasonably withheld," it said. "We have no doubt that in the present case the government should have no hesitation in granting such consent were such consent to be required."
Gammell, in the covering letter, stated that both Cairn Energy Plc and its Indian arm, Cairn India, and its subsidiaries are fully committed to complying in full with all contractual requirements needed to proceed with the deal.