London based Vedanta Resources in talks for the acquisition of Indian oil firm Cairn India

Vedanta Resources plc reported Thursday that it is currently in talks for the acquisition of Indian oil firm, Cairn India. The purchase would see the London based Vedanta Resources acquire India’s biggest oilfield, owned by Cairn India. Vedanta Resources Plc said it is still in talks regarding the acquisition of an interest in Cairn Energy Plc.

Cairn Energy Plc is listed in India and boasts owning the largest onland oil field in the country. Cairn Energy controls a stake of 62.37% in Cairn India, and it as well made an announcement to that effect regarding a potential interest acquisition. But even so, the statements from the firms follow other similar statements Cairn Energy has made in the past over a possible stake sell.

There has been speculation regarding a potential stake sale by Cairn Energy and the move may confirm them. Recently, there was rife speculation that Cairn Energy was in talks with L N Mittal and Italian firm, Eni Spa, for the sell of its stake in Cairn India. However, the latest sale report comes at a time when Cairn India’s most robust and productive oil field in Rajasthan, Mangala, is almost at its production peak.

As it is, Cairn India expects the Mangala output to peak at 125,000 barrels each day. Thus, if Vedanta goes through with the talks and the deal is sealed eventually, it stands to become the second biggest miner globally. Vedanta Resources has interests in iron ore, zinc and copper mines and this latest investment marks its first venture into the oil and gas industry. The world’s biggest miner currently is BHP Billiton.

But Cairn has reiterated that there is no certainty the deal will go through, reiterating that it would be making further announcements over the deal. Cairn India is currently valued at a $14 million and as such, Cairn Energy’s stake is valued at about $8.5 billion. Cairn India shares closed with a 2.41 per cent gain at Rs 340.60 on the Bombay Stock Exchange Thursday.

Vedanta Resources Plc is an LSE-listed diversified FTSE 100 metals and mining company, and India’s largest non-ferrous metals and mining company based on revenues. With assets and operations in India, Zambia and Australia, it is primarily engaged in copper, zinc, aluminium and iron ore businesses. Recently, it has ventured into commercial power generation business. It is the first Indian manufacturing company to be listed on the London Stock Exchange.

12 Aug 2010.