ONGC asks Cairn for details on deal with Vedanta
31 August 2010
Taken completely off guard by Cairn Energy Plc's move to off load up to 51 per cent of its stake in Cairn India to London Stock Exchange-listed Vedanta Resources promoted by NRI tycoon Anil Agarwal, public sector explorer ONGC has told the Scottish company that the deal would need the state-run company's consent.
ONGC is a 30 per cent partner in Cairn India's Rajasthan oilfields that form a major portion of the assets and valuation of the private explorer's Indian assets and valuation.
In a letter addressed to Cairn Energy Plc CEO Bill Gammell, ONGC company secretary N K Sinha has asked for details of the Vedanta deal, as it said the UK firm would need "consent of ONGC besides other governmental approvals to consummate" the deal.
According to industry analysts, the ONGC letter amounts to little more than sabre-rattling. They add the company may not be able to do much unless the oil ministry intends to stall the Cairn-Vedanta deal.
They add that ONGC may have written the letter based in its pre-emption rights being a partner in Cairn's Rajasthan fields.
In his communication to the Bombay Stock Exchange and the National Stock Exchange, Sinha said, ''ONGC has examined the relevant agreement signed by Cairn Energy Plc and its affiliates with the government of India and inter-se with ONGC as one of the participating company(ies) in the various oil blocks/fields and other related documents.''