- Cairn India gains after amicable end to pipeline tiff
Hot Pursuit Monday, January 15, 2007 11:27 Hrs IST

Print this page

Cairn India gains after amicable end to pipeline tiff

Cairn India jumped 5% to Rs 142, amid reports of reaching an agreement with ONGC to build a $340-million pipeline to transport crude oil from Rajasthan to Gujarat.

The stock rose on high early volume of 26 lakh shares on BSE.

ONGC and Cairn will share the cost of the pipeline project in 70:30 ratio. The new arrangement will also mark Cairn Indiaís involvement in the mid-stream segment of the petroleum business in the country.

One of the major reasons for the weak performance of Cairn India on debut was the concern about a possible delay in production of crude from its Rajasthan field scheduled in 2009. Cairn had warned investors that its dispute with ONGC, its partner in the Rajasthan blocks, over funding of the pipeline may delay production, scheduled to begin from 2009. The stock had settled at Rs 137.50 on 9 January 2007 (the day of its debut), compared to the IPO price of Rs 160. The stock moved around Rs 134 - Rs 135 level over the next three days, from 10 January to 12 January.

As per reports, Cairn and ONGC will first build a 340-km line to Indian Oil Corpís (IOC) Viramgam pipeline terminal in Gujarat. Viramgam is connected by pipelines to IOCís Koyali, Panipat and Mathura refineries, potential customers for Rajasthan crude. A smaller pipeline can be built along the coast or at Jamnagar, where Reliance Industries and Essar Oil also have their refineries. The construction will take 12-18 months.

Cairn India intends to utilize a major portion of the IPO proceeds to develop the Rajasthan block and for additional drilling in Ravva (Andhra Pradesh) and Cambay (Gujarat) blocks.

Previous Stories
More 4
Other Stories
4  BSE IT index registers biggest losses among sectoral indices (26-Mar 15:18 Hrs IST)
4  BPCL gains on buzz a foreign brokerage maintains outperform rating (26-Mar 15:14 Hrs IST)
4  Universal Cables gains as board to consider rights issue on 31 March (26-Mar 14:59 Hrs IST)
4  Richa Inds jumps after completing a project for L&T Construction (26-Mar 14:39 Hrs IST)
4  IT stocks decline after soft US economic data (26-Mar 14:14 Hrs IST)
4  Sintex Inds gains after allotting shares to FCCB holders (26-Mar 14:06 Hrs IST)
4  Volumes jump at Shriram City Union Finance counter (26-Mar 13:34 Hrs IST)
4  Power, gas utility stocks gain after CCEA nod for supply of cheap LNG to stranded power plants (26-Mar 13:22 Hrs IST)
4  New order boosts Gayatri Projects (26-Mar 13:02 Hrs IST)
4  Bharti Airtel gains on buzz a foreign brokerage retains buy rating (26-Mar 12:26 Hrs IST)