Europe Goes to India

on July 05, 2011 at 2:00 PM

After over ten months of deliberation, India’s Cabinet Committee on Economic Affairs (CCEA) approved the Vedanta Resources‘ request to purchase Cairn Energy.

With its lack of experience in the oil and natural gas industry, London-based metal mining company Vendanta Resources’ purchase of Cairn Energy’s local India unit may be a bold move that illustrates what some in the industry say are lucrative potentials in the natural gas industry.

The decision may also mark an increasingly global energy market that takes imports and exports for granted.

“Vedanta believes this initial 10% purchase is a further demonstration of its commitment to India,” said Anil Agarwal, Executive Chairman of Vedanta.

The initial purchase of $1,365 million of Cairn India’s stock in Cairn India Limited amounts to 10% of the company and will be completed by July 11, 2011. The subsequent purchase, still under the receipt of approval from the Indian government, will be an additional 30%, or approximately $4,043 million. Cairn Energy will continue to hold a governing stake of 52.2% in the umbrella company, Cairn India Limited.

“Cairn is pleased to have secured this adjustment to the agreement with Vedanta,” said Cairn Energy CEO Sir Bill Gammell. “Cairn continues to believe the necessary approvals to complete the Vedanta transaction will be received and is working with the government of India in a positive and constructive manner.”

Photo: Indian Prime Minister Manmohan Singh (left) turns the wheel to open a valve, allowing the first oil to flow from a new oil field, as Cairn Energy chairman Bill Gammell (right) looks on during the inauguration of the Mangala oil field in Barmer on August 29, 2009.