CapitalMarket.com - 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  IL&FS Engineering gains after emerging lowest bidder for rural electrification works (9-Dec 12:35 Hrs IST)
4  Banco Products slides after dropping buyback proposal (9-Dec 12:18 Hrs IST)
4  Finolex Industries edges higher after reporting decent Q2 results (9-Dec 12:01 Hrs IST)
4  MMTC tumbles after poor Q2 numbers (9-Dec 11:53 Hrs IST)
4  Time Technoplast advances on plans of raising funds (9-Dec 11:25 Hrs IST)
4  Sheela Foam makes an impressive debut (9-Dec 10:56 Hrs IST)
4  NLC India slips after reporting dismal Q2 figures (9-Dec 10:47 Hrs IST)
4  Jindal Steel & Power drops after posting poor Q2 results (9-Dec 09:43 Hrs IST)
4  Sail loses shine after reporting weak Q2 results (9-Dec 09:16 Hrs IST)
4  Bharti Airtel gains after announcing free voice calls (8-Dec 15:10 Hrs IST)
Next4