Seeking to sooth ruffled feathers, U.K.-based Cairn Energy on Tuesday announced that it would seek government's ‘endorsement and consent' for selling its majority stake in Cairn India to Anil Aggarwal-owned Vedanta Resources for $8.48 billion.
“For the Vedanta transaction, we will seek the Centre's endorsement and any necessary consent,'' Cairn Energy Chief Executive Bill Gammell said in a conference call with analysts, a text of which was released here.
Mr. Gammell talk of seeking government support comes close on the heels of indications that the government had toughened its stand on the deal and it would not be a case of easy sailing for the Cairn-Vedanta duo. Cairn Energy is selling up to 51 per cent out of its 62.37 per cent stake in Cairn India to Vedanta.
“We continue to work closely with the Indian government, with whom we have built an enduring partnership, throughout this process,'' Mr. Gammell said.
However, he did not list out the approvals that Cairn Energy was likely to seek from the government nor did he dwell upon the issue of government having sought details of the deal seeking explanation on provisions of the production sharing contract (PSC) in case of stake transfer.
Cairn India holds 70 per cent operator interest in the 6.5 billion barrels Rajasthan block that is at the centre of its parent Cairn Energy's deal with Vedanta. Oil and Natural Gas Corporation (ONGC), which has 30 per cent interest in the Rajasthan block, is of the view that it has the right of first refusal to buy Cairn India in case the company's ownership changed.
Mr. Gammell also appreciated the performance of the Cairn India team.
The Mangala field, the biggest in the Rajasthan block, is producing 1.25 lakh barrels of oil a day.
“With production on track to reach the current approved peak production plateau of 1.75 lakh bpd, Cairn India is now poised to account for more than 20 per cent of India's domestic oil output,'' he said.
“Subject to government approval and further investment, the Rajasthan block has the potential to produce at least 2.40 lakh bpd,'' he added.
The partial disposal of equity shares would allow Cairn Energy to focus on other areas with material growth potential, including its acreage offshore Greenland, he said.