SHARES in Cairn Energy rose 4.5%, or 134p, to £31.34p. after the company's Indian subsidiary cleared one of the last remaining obstacles in the way of the successful start of production from giant finds made by the firm in Rajasthan state.

Cairn India announced that the Indian government had given its consent to a scheme to ship oil from Rajasthan to market via an $800m (£404m) pipeline to the coast in Gujarat state, in a long-awaited development.

The decision means that Cairn India and its Indian partner, Oil & Natural Gas Corporation, will be able to recover the costs of the pipeline before they have to share revenues from the fields in Rajasthan with the government. Cairn India and ONGC share costs in proportion to their 70:30 holdings in the Rajasthan acreage.

As a result of the decision Cairn India's returns will be boosted by around £280m.