Cairn wants to hive off 25% of KG-OS/6

Vol 5, PW 23 (16 Jan 02) Exploration & Production
     

Cairn Energy got its 12-month extension for Phase-II of the KG-OS/6 work programme in record time, but for some inexplicable reason it has not been so lucky with a relatively minor matter relating to the same block.

Cairn wants to assign half its participating interest in KG-OS/6 to an affiliate. But PETROWATCH learns the issue has been meandering through the convoluted corridors of power in New Delhi for the past five months.

On 25th July Cairn told its partners Videocon Petroleum, ONGC and the oil ministry of its decision to assign 25% participating interest out of its 50% stake to affiliate Cairn Energy Godavari B.V registered in Holland.

A copy of the deed of assignment was sent to the oil ministry with Cairn promising further guarantees after the government signed the all-important 'addendum'. But oil ministry officials insist on fresh guarantees for the affiliate company.

An exchange of letters followed with Cairn insisting it had given the clarifications asked for. But five months on, the government has yet to give its consent, with inevitable implication for Cairn's partners.

On 14th August and 5th December, ONGC wrote to Cairn that it cannot sign the addendum to the PSC unless the government approves the assignment. Why the delay Nobody knows.

One source tells us the 'file' continues to shuttle back and forth between the oil ministry and the Directorate General of Hydrocarbons.