Sir Bill Gammell signed off as chairman of Cairn Energy today by admitting his only regret at leaving the oil and gas explorer he founded was an ongoing tax dispute with the Indian government.
The Edinburgh-based energy company has been blocked from selling its $1 billion (£596 million) stake in its former subsidiary Cairn India after the country’s tax authorities submitted a request for information at the start of the year.
Chief executive Simon Thomson told shareholders at yesterday’s annual meeting that the government was seeking details under retrospective legislation – introduced in 2012 – into the group’s reorganisation six years earlier, and said Cairn was “fully compliant” with laws in force at the time.
Looking back on a career at Cairn spanning a quarter of a century, Gammell said he was confident to be leaving the company in “highly capable hands” with Thomson at the helm alongside new chairman Ian Tyler, the former Balfour Beatty boss.
Speaking after receiving a round of applause from investors at the event, at Edinburgh’s Caledonian Hotel, he said: “The only sadness I have is that we have $1bn tied up in India.
“Looking at the balance of the company, that was equity for a potential sale and was part of the strategy for where Simon was taking the business, and suddenly it was taken away.”
With the result of India’s general election due to be released today, Gammell said the new government – likely to be Narendra Modi’s BJP – “will have to start resolving the barriers to foreign investment into India”.
He said: “Hopefully from Cairn’s perspective, if we’re sitting here in six months’ time, I think there’s a reasonable chance it will have been resolved. If not it may take some time, and there may be some arbitration, but I’m pretty optimistic.”
Thomson added: “It isn’t possible to predict a time. We’ve got a lot of experience over the years with India but we have to wait and see what happens and sit down with the new government. We’re trying to get this done as soon as we possibly can but there has to be a good deal of patience.”
The subject of Greenland – where Cairn has so far failed to strike oil – was raised by one shareholder who asked the board about the proportion of concessions in the Arctic that might be considered “useless”. Thomson said the group was hesitant to write anything off and was “absolutely focused” on the multi-billion barrel Pitu prospect.
In January, Cairn said it was working with its partners – Norway’s Statoil and Greenland’s national oil firm Nunaoil – to “mature” its plans for Pitu and Thomson said the earliest date for drilling to begin would be summer 2015.
The firm also said yesterday that French bank BNP Paribas has agreed to underwrite a $575m debt facility to help fund the development of its Catcher and Kraken projects in the North Sea.Gammell, who is chairman of Genius Foods, the Edinburgh firm specialising in gluten-free bread and cakes, sits on the board of organising committee for the Glasgow Commonwealth Games and is also the founder and chairman of the Winning Scotland Foundation, which aims to help young people develop skills for life through sport.
Although he remains a Cairn shareholder, Gammell insisted he was happy to hand over the reins and his main focus now was the Commonwealth Games, which kick off on 23 July.
He said: “I’m so privileged to have a highly competent team that will be able to pick up the ball and run with it.”