Jaipur, March 23 : The Cairn-ONGC joint venture (JV) Saturday began commercial sale of gas from its Rajasthan block.
The initial commercial volumes will be about 5 mmscf per day (equivalent to 1,000 barrels of oil per day).
The sale process was inaugurated by Minister of Petroleum and Natural Gas M. Veerappa Moily in Barmer, over 550 km from here, in the presence of Chief Minister Ashok Gehlot and Minister of State of Petroleum and Natural Gas P. Lakshmi.
UK's Cairn Energy has sold a further 3.5 percent stake in its once subsidiary, Cairn India n a deal valued at around $360 million, according to a statement from the company.
Cairn Energy had sold a majority stake in Cairn India to Vedanta Resources for $8.7 billion. With the further sale in stake, the company now sells holds 18.3 percent in Cairn India. The company said that it has entered into an agreement to sell 67 million shares in Cairn India, which make up about 3.5 percent stake in the country.
India's home ministry has given a go-ahead to Cairn Energy's plans to sell its majority stake in its India unit to Vedanta Resources. The approvals would allow the closure of the multibillion-dollar deal between the mining giants. The deal has reportedly also received a no-objection certificate from Oil & Natural Gas Corp (ONGC), which is the joint venture partner of Cairn India Ltd.
Cairn Energy was waiting for approval from ONGC and the Ministry of Home Affairs to sell its 30 per cent stake in the India unit to London-listed, India-focused Vedanta. Vedanta has already acquired 28.75% stake in Cairn India through an open offer and from Cairn Energy.
The Cairn-Vedanta deal is now hinging on ONGC’s approval. Though the Petroleum Ministry has approved the deal but until the no-objection from partner ONGC, this acquisition is not going to happen. This has been informed by one of the officials of ONGC. The mining group Vedanta Resources' acquisition of Cairn India has already received the approval of the government and the related authorities.
A team of top executives from UK-based Cairn Energy Plc and Vedanta Resources assembled on Sunday for the first oil ministry meeting to break the long time stand still project over conditioning for clearing their $9.6 billion M&A deal.
S Sundareshan, oil secretary said that although Vedanta’s bid fails to close but the overall discussions were extremely constructive and there is hope that the matter would be resolved soon.
There is a hope to find out a positive solution to acquire control of Cairn's Indian arm that operates the Barmer oilfields and several other acreages.
Cairn Energy Plc has talked to Vedanta Resource Plc to finalize deal regarding stock/share trading issues.
Representatives of both companies met to discuss further. Cairn is ready to hand over the ownership right of shares to Vedanta Group for $8.48 billion. The legal shareholders in Cairn have fully supported the transfer of the shares to Vedanta, an Indian company with headquarter in London.
The month of August has seen the least amount of merger and acquisitions activity since September 2009. The total value of the deals that took place was worth $4.2 billion.
As per the research done by VCEdge, total 11 M&A activities during the month. The picture could have been better if the proposed Vedanta deal with Cairn which was worth $9.6 billion had taken place.
Research also said that most of the activity has taken in March and June. The total deal value in these two months was greater than $14 billion. July saw the deals touching $5.4 billion mark.
A top official from the Oil Ministry said to Reuters that the state-run oil firms are not going to counter bid against Vedanta resources' bid for Cairn India.
The companies in question are Oil and Natural Gas Corp, GAIL India and Oil India. The source who did not wished to be named said in statement, "There is no chance for a counter bid by Indian firms as the valuation done by Vedanta for Cairn India is already very high."
Despite so much of hype and trouble around the Cairn and Vedanta deal, the UK's oil explorer has said that it is confident the deal between the two will go through.
The deal will be when Cairn India will sell majority stake to Vedanta Resources. On Tuesday, it said that it has failed to find out oil in Greenland. The T8-1 well in Baffin Sea between Greenland and Canada, has very small traces of oil unlike what it had expected.
Vedanta Resources is a mode of expanded its business outside metals, as currently the company is in talks to acquire a stake in the Indian unit of Cairn Energy.
Cairn India is a $13.8 billion company in which the parent company controls around 62% stake. The metal major- Vedanta group is released a statement in 2008 in which the company mentioned that it will spend $20 billion in India on mines and power plants over four years. And this move by the company is considered in the same spirit.