ONGC gives nod for Cairn India stake sale to Vedanta
06 December 2011
State-owned Oil and Natural Gas Corp has given its consent to the acquisition of Cairn Energy's stake in the Rajasthan oil fields jointly operated by Cairn India and ONGC, by London-listed mining firm Vedanta Resources.
Vedanta, the India-focused mining firm, which operates Sterlite and Sesa Goa in India, had in August, agreed to acquire the stake of the Cairn Energy in Cairn India-ONGC joint venture for $8.71 billion.
ONGC, which partners Cairn India in the Rajasthan oilfields and seven other properties in India, has waived its preemption rights and gave a no-objection certificate to the deal.
ONGC had, in September, agreed to waive its preemption rights if Cairn India gave a written undertaking to share royalty and pay its share of oil cess on crude oil produced from the Rajasthan fields.
ONGC, being the licensee of the Rajasthan block, had to pay the entire royalty on oil produced from the Rajasthan fields, although Cairn was the operator and had 70 per cent of the share of profits.
Although Cairn India was opposed to the demand, Vedanta and Cairn Energy have prevailed on it to accept the demands of ONGC and the government for the smooth passage of the transaction.
The legal document, wherein Cairn India as well as its current and future promoters commit to accepting the conditions was, however, held up for two months over minor technicalities.