Cairn chief meets Oil Minister on stake sale to Vedanta
A day after agreeing to sell majority stake in its India subsidiary for $8.48 billion, UK's Cairn Energy Plc top management today met Oil Minister Murli Deora and other key officials to clear any regulatory roadblocks to the deal with Vedanta Resources.delhi Updated: Aug 17, 2010 17:31 IST
A day after agreeing to sell majority stake in its India subsidiary for $8.48 billion, UK's Cairn Energy Plc top management today met Oil Minister Murli Deora and other key officials to clear any regulatory roadblocks to the deal with Vedanta Resources.
Cairn Energy Plc Chief Executive Bill Gammell flew into the national capital this morning and straight got down to business, meeting government officials and Cairn India staff to clear doubts, if any, about the deal.
Sources close to the development said Gammell, flanked by Cairn India CEO Rahul Dhir met Deora and Oil Secretary S Sundareshan to explain the rational of the deal.
"It will be business as usual at Cairn India," a source quoted Gammell as telling Deora. Billionaire Anil Agarwal-run Vedanta Resources, which is buying up to 60 per cent in Cairn India (40-51 per cent from Cairn Energy and rest through a public offer), is neither changing the name nor the team that runs the company.
Only the corporate structure of Cairn India is undergoing a change, he is believed to have told Deora and Sundareshan.
Cairn Energy did not seek a buyer, but it was Agarwal who in early July called Gammell directly seeking a meeting. The two met in Edingurgh where Agarwal made the offer. As per UK listing requirement, Cairn Energy took the takeover offer to its board, which accepted it.
At the centre of the deal is the giant Rajasthan block, which has potential to produce 240,000 barrels of oil per day, equivalent to 12 million tons of crude oil produced by ONGC from its prime Mumbai High fields.
Sources said Gammell told Deora that the field can go up to 300,000 bpd and Cairn Energy got out of it only because the its core competence is finding oil and quickly putting it to production and managing it now is best left to someone else.
Some in the ministry and the oil regulator DGH believe that the Vedanta deal was contingent on government approval, but the contract for none of the three producing oil and gas properties, including Rajasthan that Cairn India owns, provides for prior government approval.
The PSCs provide for requirement of government nod only when participating interest in a block is sold or transferred but in the Vedanta deal the interest remains with Cairn India, sources said, adding that Gammell may have been seeking concurrence to the deal which is different from mandatory approval.
Sundareshan too said the "PSC provides for concurrence of the government when any assignment of interest in a block takes place."
The opinion of ONGC, which holds 30 per cent stake in the Rajasthan block, would be kept in mind, he said. "ONGC has not raised any concerns yet, as there is still no official proposal before us."
Gammell also met DGH S K Srivastav and is to meet ONGC Chairman and Managing Director R S Sharma in the evening.