The Cairn Energy oil exploration group has confirmed that it has sold a 51 percent stake in its Indian arm to help fund its project off the coast of Greenland. Just as offshore drilling becomes more controversial in the wake of the Gulf of Mexico disaster, the Edinburgh-based group will return a “substantial sum” to investors and add to its two rigs already positioned 200km from Aasiaat, on Greenland’s west coast.

The company has sold the majority of its 62 percent stake in Cairn India to Vedanta for GBP 5 billion, in order to concentrate its efforts on the Arctic region. The firm insists that the projects – which will drill into seabed less than 1,000 metres below the surface – do not classify as “deep water”. However, some of Cairn’s hired rigs do have deep water capabilities.

“We have probably over-engineered,” said a Cairn spokesman in a report by The Guardian. “We are very conscious of our responsibilities in Greenland and we are doing everything possible to ensure a safe operation there.”

Due to the harsh climate, Cairn has hired a team of “iceberg management” companies to ensure its rigs are secure. According to a presentation given to investors, the companies will use vessels to tow icebergs away, and a “water cannon” to knock them off course.

Vedata will pay GBP 5.58 per share, a 21.8 percent premium over the price on August 11 when rumours of the deal first started circulating. The precise number of shares acquired, however, will depend on the take-up of an offer Vedanta is to make alongside its subsidiary Sesa Goa. Although analysts predict that Cairn’s share register will change after the transaction, its largest investors, such as F&C, Legal and General, HSBC and Blackrock, are set to benefit from the eventual cash windfall.

“Some investors buy Cairn shares to gain exposure to the oil price. That will no longer be the case. There will be a small exposure with their 11 percent holding in Cairn India, but the largest proportion will be quite high risk and the investor base will change as a result,” said Sanjeev Bahl, an analyst with stockbroker Numis.

News of the deal comes as a Danish navy Special Forces team monitors the progress of a Greenpeace protests ship heading towards the Arctic. The environmental group aims to bring attention to problems related to oil drilling that it says go “far beyond” the disaster recently seen on BP’s Deepwater Horizon rig in the Gulf of Mexico.

The Cairn spokesman said, “We’ll just have to see [if we get a visit]. We’re comfortable with the operation we are carrying out. People have their views.”

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