- 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  eClerx Services drops after Q2 earnings (31-Oct 12:01 Hrs IST)
4  IT stocks gain on positive US economic data (31-Oct 11:26 Hrs IST)
4  OnMobile Global jumps as net loss narrows in Q2 (31-Oct 11:20 Hrs IST)
4  JK Lakshmi Cement jumps to record high on blockbuster Q2 outcome (31-Oct 10:40 Hrs IST)
4  Bliss GVS Pharma declines after weak Q2 results (31-Oct 10:37 Hrs IST)
4  Titan tumbles after Q2 earnings (31-Oct 10:02 Hrs IST)
4  Thermax jumps on securing order for power plant in Africa (31-Oct 09:49 Hrs IST)
4  Ambuja Cements gains after strong Q3 earnings (31-Oct 09:35 Hrs IST)
4  IDFC gains as board approves demerger of financial unit (31-Oct 09:22 Hrs IST)
4  Bharti Airtel drops in early trade after Q2 results (31-Oct 09:13 Hrs IST)