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Financial Times: World tour sparks rush for deal

By Ed Crooks
Published: January 28 2008 01:17 | Last updated: January 28 2008 01:17

The fact that after months of delay, the Indian government now appears to be keen to expedite an agreement with Cairn India may have something to do with the fact that Murli Deora, the petroleum minister, and his officials are touring the world looking for foreign investment.

They were in London last week and are in Houston on Monday, on the road show for the seventh round of licences under India’s new exploration licensing policy, trying to attract investors up to and including the super-majors such as ExxonMobil, BP and Royal Dutch Shell.

India has vast unexplored areas, but for anyone drawn by thoughts of the oil and gas that they might hold, Cairn has been a cautionary tale.

After making India’s biggest onshore oil find for two decades, with an estimated 3.6bn barrels of oil equivalent in place, Cairn Energy pressed ahead with its development plan to bring much-needed oil to fuel India’s fast expanding economy.

It took the decision to spin off its Indian business to give it local investors and a local listing. Yet it still found it very hard to secure all the approvals it needed as fast as it had hoped. The crucial “right of use” for the land to build the pipeline was given last September, but the question of cost recovery remained unresolved.

If the issue were to continue to drag on, it would leave a question in foreign oil companies’ plans over whether they would receive similar treatment should they achieve similar exploration success.

Copyright The Financial Times Limited 2008

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