New Delhi: Cairn Energy may sell a stake in its Indian operation Cairn India, but will not exit the business, the head of the the company’s local unit said on Friday.
“I don’t think they are exiting the business. They are just selling stake... It may or may not be substantial,” Rahul Dhir, chief executive of Cairn India Ltd told reporters after meeting oil secretary S. Sundareshan.
India-focused Vedanta Resources is in talks with Cairn Energy, which has a 62.37% stake in Cairn India, to buy a stake in the unit, both companies confirmed on Thursday. Such a deal would be the diversified miner’s first move into oil and gas.
Sundareshan said he had learnt from Cairn India that discussions between the two firms were at a preliminary stage.
He said that a company that has signed a production sharing contract (PSC) with the government of India for an oil exploration block would need the government’s approval if some stake in the field or the company were sold.
“All PSCs have provisions for appropriate government approvals before such changes in the ownership are made,” said Sundareshan, the top official in the oil ministry. Dhir did not provide further detail on the talks.
“All I know is that discussions are under way. I am not a part of this transaction,” he said.
“What I do know is that they (Cairn Energy) remain a very strong supporter of our business. If a new strategic shareholder is coming, it only underscores the belief that they have in our business,” Dhir said.
Shares in Cairn India, the fourth-largest oil and gas company in the country, were up 1.95% at Rs347.25 at 0725 GMT.
A huge oil find in the desert state of Rajasthan helped propel Cairn Energy from a small company to a major oil producer and led it to spin off the Indian operations.
Cairn India was valued at $13.6 billion at the close of trading on Wednesday, valuing Cairn Energy’s stake at $8.5 billion.