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ONGC not to exercise rights in Cairn-Vedanta deal

Oil and Natural Gas Corp will not exercise its pre-emptive rights in Cairn Energy's plans to sell a controlling stake in its Indian unit to Vedanta Resources, its chairman said on Sunday.

January 31, 2011 / 09:56 AM IST
 
 
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Oil and Natural Gas Corp will not exercise its pre-emptive rights in Cairn Energy's plans to sell a controlling stake in its Indian unit to Vedanta Resources, its chairman said on Sunday.


The decision could quicken the completion of a deal worth up to USD 9.6 billion and boost investor sentiment about India's business climate.


The state-run explorer, a partner in Cairn India's big Rajasthan oil fields, will want a quick resolution to the issue of paying royalty on crude oil output from the fields, R.S. Sharma told reporters a day before he steps down as chairman.


Cairn Energy agreed in August to sell a stake of 40%-51% in Cairn India to Vedanta but the deal has been delayed on rumblings from the Indian government and from ONGC and dented India's attractiveness for foreign investors.


Sharma said the parties ought to sit down and thrash out a solution on payment of royalties on the crude. ONGC has a 30% stake in the Rajasthan block but pays royalty on the entire production.


ONGC has, in the past, said the royalty payment should be shared proportionately by the two partners.

"We want a quick resolution through bilateral discussions. The parties need to sit together and find out a viable solution."

first published: Jan 31, 2011 08:09 am

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