London: British oil firm Cairn Energy is lining up exploration opportunities in Lebanon as a long-running deal to sell a stake in its Indian business nears its conclusion.
In June, India granted conditional approval for Vedanta to buy a stake in Cairn India from Cairn Energy in a $6 billion deal that was first announced a year ago. .
Should state-controlled partner ONGC give its consent, the finalisation of the sale could come by the end of September, said Cairn’s chief financial officer on Tuesday.
“With a fair wind and all the stars aligning, it could complete by the end of September,” chief financial officer Jann Brown said in a conference call with reporters, adding that given past delays she was wary of making predictions.
With the drawing to a close of the Indian deal, Cairn said it was now looking to Lebanon and the potential to find oil and gas in the Eastern Mediterranean.
The company said it planned to participate in a licencing round in Lebanon due to take place next year, where Cairn’s success would add acreage in a politically-sensitive part of the world.
Lebanon and Israel do not agree on their maritime border and remain in a formal state of war, but chief executive Simon Thomson, who took over from Cairn’s founder Bill Gammell in June, shrugged off concerns about the region.
“In relationship to potential boundary disputes, I think that’s a fairly common thing around the world. Obviously we will assess, as we do anywhere, the political, technical, commercial risks in whatever we do, but there’s nothing that’s stopping us being interested in this licencing round,” he said.
Cairn is no stranger to controversy--its current exploration programme off the coast of Greenland has attracted criticism from environmental groups who argue that an oil spill in the remote Arctic would be difficult to clean up.
Part of the cash returned from the Indian transaction could be used to fund drilling in Lebanon, where Cairn said it has teamed up with a unit of CCC, a Lebanese private construction company, and UK-based explorer Cove Energy .
Shares in Cairn, which have fallen 26% in the last month underperforming the oil and gas sector index by about 9%, traded up 2.2% to 296.2 pence at 0914 GMT, beating the index which was 1.6% higher.
The company said it had cash of around $1 billion on 30 June and its balance sheet would be strong enough not to require it to further reduce its stake in its Indian business to fund any drilling in Lebanon.
“We’re very comfortable with our position in India. We have the flexibility and strength in our current balance sheet not to have to contemplate any (further) sales in India,” Thomson said.
Cairn plans to spend $600 million in Greenland this year drilling up to four wells in its attempt to open up a new oil province, but has so far had little success.
Thomson said the firm would only move into Lebanon, where the company anticipates a competitive bidding process after Noble Energy and its Israeli partners made a large gas discovery in nearby waters, if the commercial terms suited.
The US Geological Survey (USGS) last year estimated that the Levant Basin Province lying mostly off the coast of Israel, Lebanon and Cyprus could hold 122 trillion cubic feet of recoverable gas, making it one of the world’s richest deposits.
Meanwhile, Cairn continues to drill two wells in Greenland and Thomson said the company will at some point look to bring in a partner on its Greenland acreage.
“We believe there’s always going to be an appropriate time to entertain the farm down of our acreage,” he said.