Administrateur du site
Messages: 4397
Inscription: Jeu 30 Juil 2009 16:48
Localisation: la seyne sur mer
India increases pressure on Cairn over deal with Vedanta Res
INDIA’S oil minister ramped up the pressure on Cairn Energy saying he would not approve the sale of a controlling stake in its Indian unit to Vedanta Resources unless the concerns of its local partner were addressed.
“We are determined that the concerns of (state-owned) ONGC are addressed,” Jaipal Reddy told reporters in New Delhi.
The comments followed a short meeting with Cairn Energy’s chief executive, Sir Bill Gammell, which the company described as “positive and constructive”.
They were regarded in India as a sign that the government will insist on changes to the royalty regime affecting Cairn India, which could result in a big drop in the valuation of the unit.
Reports in India suggest these might prompt Vedanta to walk away from the agreed deal, to acquire 40% to 51% of Cairn India for up to $8.5 billion (£5.3bn).
Edinburgh-based Cairn Energy has said it will distribute the bulk of the proceeds to shareholders.
ONGC is currently required to pay all the royalties on production from the huge fields that Cairn discovered in Rajasthan state, but only owns 30% of the acreage. The term was included in the terms of the production sharing contract that Cairn Energy signed in the days when the government was eager to get western explorers into India. ONGC said that it wants the royalty payments to be deducted from revenues before arriving at the profit, which it splits with Cairn India.
The government is believed to want to impose 10 further preconditions, some of which could be hard for Vedanta to swallow.
Following yesterday’s meeting, Cairn Energy said it continued to work with the government to complete the deal before April 15, when the sale agreement lapses.
According to reports in India, Sir Bill said the company would not go back to its shareholders to seek an extension to the latest deadline. This may be an attempt to concentrate the minds of officials, who have spent months mulling the proposed deal without reaching a conclusion.
Cairn Energy originally hoped to complete the deal by December 31, however, the government appears to be treading a fine line between potentially irreconcil-able interests. It has an interest in boosting ONGC’s profitability and faces political pressure not to be seen as caving in to outsiders.
But if ministers insist on changing a contract that is still in place they run the risk of scaring off overseas investors.
Shares in Cairn Energy closed down 2%, or 10.4p, at 425p, reversing the gains enjoyed on Monday, when there were encouraging noises from the Indian government.