Good news for Cairn

CAIRN Energy will be allowed to cover much of the cost of a key Indian oil pipeline through oil revenues after the Indian government finally allowed the "delivery point" for the oil to be shifted from inland Rajasthan to Salaya at the Gujarat coast, where it would be refined.

The decision had been pending for some months and Cairn announced recently that it would push ahead with the project even if it did not get the approval, fearing it would miss its target to produce oil from Rajasthan in the second half of 2009.

Shares in Cairn Energy jumped 4.5 per cent to 3,134p. Analysts at Hoare Govett said the decision was expected, but would be good for sentiment, adding: "We were already assuming this was the case in our models."

Cairn India chief executive Rahul Dhir said the project was "of national importance and a landmark project for Rajasthan". Construction would create more than 10,00 jobs, he said.