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Cabinet Skirts Cairn-Vedanta Deal

BW Online Bureau Nov 08, 2014

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[The cabinet on Thursday steered clear of discussing Vedanta Resources' plan to buy British oil explorer Cairn Energy's Indian assets, further delaying what could be one of the largest deals in the Indian oil and gas sector. "It did not come up today," Oil Minister S. Jaipal Reddy told reporters after the weekly cabinet meeting in New Delhi. Reddy had earlier said the cabinet would review the deal this week or next. Last month, an Indian ministerial panel said it would refer the deal back to the cabinet, but did not disclose its recommendation, which it said was "unanimous." A government source told Reuters the panel would recommend that the operators of Cairn Energy's key Indian oil field share the royalty burden in proportion to their stake in the project, a proposal that could derail the deal. Cairn Energy agreed last August to sell a majority stake in Cairn India to Vedanta in a deal worth up to $9.6 billion but the it has been held up over issues with ONGC, which has a 30-percent holding in the Cairn-operated fields in western India, but pays 100 percent of the royalties. India's oil ministry has been pushing to share the royalty burden between ONGC and Cairn India, a move opposed by both Cairn and Vedanta. Any change in the royalty structure would impact valuations and could jeopardise the deal, analysts have said. Vedanta has already acquired 8.1 percent through an open offer to Cairn India's minority shareholders, and snapped up another 10.4 percent from Malaysia's Petronas. It has also raised $1.65 billion through a private bond offering to help pay for the planned acquisition. Earlier on Thursday, Cairn Energy said it would replace its current chief executive officer Bill Gammell and announced a sweeping board shake-up. (Reuters)