Clarity on Cairn-Vedanta deal by Dec first week

After the UK-based Cairn Energy Plc agreed to seek government nod for transferring its three producing oil blocks to Vedanta Resources, petroleum minister Murli Deora said on Friday that the government will provide clarity on the deal by the end of the first week of December.

“I can’t say anything about the deal now but you can expect some decision by next to next week,” he said, adding that his ministry has received an application from Cairn Energy seeking approval to transfer three blocks of the company to Vedanta.

Cairn India, the Indian subsidiary of the UK-based Cairn Energy Plc, currently holds three producing oil blocks in the country for which Anil Agarwal-controlled Vedanta Resources has shown interest. All the three blocks held by Cairn India were awarded before the government’s new exploration licensing policy (Nelp) came into existence in 1999.

Cairn India currently has rights to 10 oil blocks in the country out of which only three are producing and are located in the Barmer oil fields in Rajasthan.

In August, the London Stock Exchange-listed Vedanta Resources offered a price of $9.5 billion to buy out the producing Indian assets of Cairn Energy. Barmer oil fields currently produce up to 120,000 barrels of oil per day (bpd). The production is expected to double in the next few years.

Out of the total $9.5 billion that Vedanta Resources will pay to purchase 60% of Cairn India, the company plans to raise a debt of $6.5 billion through a consortium of banks.

The rest will be invested by Sesa Goa, a group company mining iron ore from its Goa mines. Sesa Goa will pick up 20% in Cairn India.