Cairn India Deals With Vedanta Resources

Cairn India Deals With Vedanta ResourcesThe Cabinet Committee on Economic Affairs (CCEA) led some clauses that were to be fulfilled by Cairn India so as to carry out its stake deal with the Vedanta Resources. As per the guidelines, Cairn India will have to share a percentage of its income with Oil and Natural Gas Corp (ONGC), for getting the Rajasthan fields, the company was suppose to take back their cess negotiation case and seek a No Objection Certificate (NOC) from ONGC.

As per a source, Cairn India was not going to pay the royalties instead it was ONGC who had to pay it on behalf of Cairn India and the amount was going to be deducted from the oil sale revenues, before the profits were distributed between the partners and government. With agreement on such clauses, the Vedanta was going to lower Cairn India's profit over the approved life of the life lasting 2020 from USD 7.43 billion to USD 5.75 billion.

Vedanta paid USD 6.02 billion for a 40% stake in Cairn India at a reduced price of Rs 355 per share, down from the original USD 6.84 billion. Cairn India held 10 oil and gas blocks in India, including the huge RJ-ON-90/1 oil block, earning 125,000 barrels a day a 17% of India’s total crude production.