CAIRN Energy has announced plans to shed jobs in Edinburgh as the company refocuses but chief executive Simon Thomson said it is in good shape.

Mr Thomson said the oil and gas company is consulting staff about making an unspecified number of jobs redundant under a programme that will result in a "fairly significant reduction in the fixed cost base".

Cairn, which employs around 200 people, provided $3 million (£1.8m) in the first half relating to proposed redundancies.

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Mr Thomson said consultations about job losses were not enjoyable but such changes were natural in the exploration and production business.

"E and P companies go through their life cycle, scale up and scale down according to the level of activity they have and their orientation," he noted.

Mr Thomson said Cairn is nearing the end of a progamme of deep water drilling in frontier areas like Greenland. It moved into the area in 2007 under founder Sir Bill Gammell after making huge finds in India.

After looking hard at how capital should be allocated, Cairn wants to minimise spending on high risk frontier positions. The "orientation" of spending will be towards mature and emerging basins like the North and Barents Seas.

Cairn is farming into a licence in the Barents Sea operated by Norway's Statoil.

The company has spent $1 billion drilling off Greenland without making a commercial find, but will only do further work on the key Pitu block if it can persuade others to buy some of its stake.

Asked if Cairn had been wrong to invest so heavily off Greenland, Mr Thomson noted the company became active there after its valuation soared to around $10bn following its success in India.

"It was a different call at that stage. It is not something that would be appropriate for a company of our size and scale today," said Mr Thomson.

Cairn sold a controlling stake in its Indian business to Vedanta for $5.5bn in 2011, and paid $3.5bn of the proceeds to shareholders. It has a market capitalisation of around £1.1bn.

Mr Thomson was unable to indicate when Cairn hopes to resolve a tax dispute in India that is causing big problems. Cairn can not sell the remaining $1.1bn stake in its former Indian subsidiary while the issue drags on.

Mr Thomson said: "This is a massively important issue for us and we're doing everything we can." He said he had been to India as part of a "hugely active engagement process", without giving details. Cairn says it paid all tax due in India.

However, he added: "We are in good shape as a company notwithstanding the Indian tax issue."

Noting Cairn has a $575m undrawn debt facility and had $1bn cash at 30 June, Mr Thomson said it is fully funded to deliver big planned developments in the North Sea and an active exploration programme.

Cairn has a busy two years in prospect as it reaches key milestones in the strategy developed by Mr Thomson after succeeding Sir Bill in 2011. This combines potentially transformational drilling in places like Senegal with less risky activity in the North sea.

The company has stakes in the giant Catcher and Kraken fields in the UK North Sea, which are expected to be in production and generating lots of cash by the end of 2017.

The company will drill seven wells over the next 12 months in areas where it acquired acreage under Mr Thomson including Senegal.

It wrote off $51m in the first half following two dry wells off Morocco.

Cairn lost $120m before tax in the six months to June. It lost $373m in the first half last year, after writing $268m off the value of its Cairn India stake.