ONGC says its approval needed for Cairn-Vedanta deal

Thursday, October 21, 2010

MUMBAI - State-run Indian oil and gas explorer ONGC Thursday said its approval is required if a proposed sale of Cairn Energy’s Indian unit to Vedanta Resources has to go through.

The company said it also has the option to exercise its preemptive rights. In a letter, it enquired about the financial strength, technical capability and past experience of Vedanta in the oil and gas field.

“In accordance with the terms of the relevant agreements, the consent of ONGC would need to be sought for the proposed transaction,” said the upstream company in a regulatory filing.

“To enable ONGC to decide its future course of action, we have requested Cairn Energy Plc to provide full details along with copies of the agreements and other arrangements entered between Cairn and proposed buyer,” the statement added.

ONGC holds 30-50 percent stake in each of Cairn India’s three oil blocks, as well as some NELP blocks like in the Krishna-Godavari Basin, where gas has been discovered.

Cairn Energy has maintained that ONGC’s preemptive rights would not get triggered as the deal does not involve sale of Cairn India’s assets to Vedanta but is only a corporate transaction involving transfer of shares.

According to reports, ONGC had earlier also written to the Solicitor General Gopal Subramanium seeking his advice on the matter.

Subramanium in his reply told the company that the governments approval would be required for Cairn-Vedanta deal.

Filed under: Economy

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