Cairn won't accept tinkering with Rajasthan deal

11th Feb 2011 12:20

Cairn Energy won't put up with any interference from the Indian government in the $9.6bn sale of its oilfields in Rajasthan to Vedanta, it has told shareholders.The Scottish oil explorer announced the deal last August and wants it to conclude before April 15, but there are concerns Indian officials may try to tinker with the royalties currently paid by state-owned Oil and Natural Gas Corporation (ONGC).ONGC received a 30% stake in the Rajasthan fields but promised to pay all the royalties if oil was found. It wants Vedanta to take on a big chunk of the payments if it takes over from Cairn."The transaction continues to progress in a consensual way to secure the necessary consents and approvals from the various Indian government authorities and stakeholders," Cairn said yesterday."The Cairn India board of directors has stated that any condition tied to the approval of the transaction, which can negatively impact the value of the company cannot be accepted." If the valuation of Cairn India alters, or the transfer of ownership of the assets is not agreed by the government within the next two weeks, experts fear the deal in its current form may collapse.The hold-up is already hampering production, which is awaiting approval for a shift up from 125,000 barrels of oil per day (bopd) to 150,000 bopd.