Cairn Energy to sell Indian stake to Vedanta

Cairn employee The approval by the interior ministry means the sale of part of Cairn's Indian stake can go ahead

The Indian interior ministry has given approval for Cairn Energy to sell its stake in its Indian operations to mining firm Vedanta.

The approval means Cairn has overcome the final hurdle in the long running bid to sell 40% of its share of the Indian business.

It leaves the Edinburgh oil explorer with a 22% stake in Cairn India.

The deal has been held up for more than a year due to a disagreement over royalty payments.

Earlier this year, cabinet ministers in Delhi decided to change the terms under which Cairn Energy was encouraged to explore for oil in the Rajasthani desert.

That deal was struck before any oil was found, when Indian authorities were keen to make it attractive for foreign companies to drill for oil.

The original terms forced ONGC, the majority state-owned Oil and Natural Gas Corporation, to pay all the royalties on any oil extracted from Cairn India's massive Mangala oil field in Rajasthan.

As part of the deal Cairn has agreed to share the royalty burden and the sale will still net the Scottish company about £3.4bn ($5.46bn).

Cairn's focus has moved to Greenland since it announced it was reducing its stake in its Indian unit, however after two years of drilling in the Arctic, it has had little success.

More on This Story

Business of Energy

Related Stories

The BBC is not responsible for the content of external Internet sites

More Scotland business stories

RSS

Features

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.