Terry Murden: New era in the pipeline for Cairn Energy

WHEN he unveiled annual results for Cairn Energy in March, chief executive Sir Bill Gammell spoke of the company reaching a "defining moment" in its history. That moment is likely to be tomorrow when the company offloads a big stake in its lucrative Indian oil field.

Gammell, who stands to realise a healthy profit on shares in the group already worth close to 20 million, is making a strategic shift at an opportune time. The company's Rajasthan field is capable of producing 240,000 barrels a day and Cairn only needs to sell 10 per cent or so to raise the $1 billion (640m) required to fund its initial exploration activities in Greenland, the next big staging post.

But Vedanta Resources, the mining company run by Indian billionaire Anil Agarwal, is believed to want 51 per cent of Cairn India in which Cairn Energy has a 62.4 per cent stake. It would raise an estimated 5bn, giving Gammell and his board the scope to fund other activities in Africa, Brazil and possibly the Falklands, and leave enough to pay a handsome dividend to shareholders.

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Gammell hardly needs the money, given that he earns a near 1m salary, made 3m in March from selling some of his holding and has received options worth several million more. His fellow directors are also in the multi-million club and will share in any Indian bounty, as will institutions and private shareholders who have benefited hugely from Cairn's growth. The shares are up almost 30 per cent since May alone when speculation of a deal of some kind first surfaced.

The real prize, however, is taking Cairn into uncharted territory. Cairn will retain a minority stake in Cairn India while leaving the next phase of development in the country to Argarwal, whose influence in the corridors of the Indian government will allow him to take Vedanta in the same direction as his mining rival BHP Billiton.

An announcement is expected tomorrow and could be one of two big acquisitions affecting Scottish oil companies this week.

Tom Cross, the boss of Aberdeen firm Dana Petroleum, is also sitting on a huge potential pay-off if his suitor comes back to the table.

Cross's near 2 per cent stake in the company is worth 30 million and he stands to gain as much again in options if his board succumbs to a bid from the Korea National Oil Corporation.

As of Friday, however, the deal was in the balance as a stand-off over KNOC's refusal to sign a non-disclosure agreement led to a cooling in talks. The markets are now divided on whether KNOC will break with tradition and launch a state-backed hostile bid, or walk away.The latter outcome would send Dana's shares into a tailspin and postpone Cross's big windfall until another day.

Renewables fuel a growth sector

WE keep being told the renewables industry has the potential to emulate the oil sector, though sceptics continue to wonder if the numbers will ever add up.

In the meantime, big projects are being rolled out at an increasing rate and another will be announced on Tuesday.

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Tidal power along with its windy cousin will help fill the engineering and offshore yards and I fully expect some news on contracts coming to Scotland.

First Minister Alex Salmond is a committed renewables supporter but he would not be bothering with a trip to Oslo to visit turbine developer Hammerfest Strom unless there was something in it for Scotland.

ScottishPower, through its Spanish parent Iberdrola, will be driving the next phase of the deal with Hammerfest which is also working closely with Scotland's academia.

Experts tell us that renewables will only contribute a minority of Scotland's energy needs. But it looks like a growth sector we should get fully behind.

• tmurden@scotlandonsundaycom

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