ONGC to Decide on Cairn-Vedanta Deal in September .

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ONGC to Decide on Cairn-Vedanta Deal in September .
AUGUST 22, 2011, 10:33 A.M. ET.
By ERIC YEP
MUMBAI – Oil & Natural Gas Corp. will decide in September whether to approve Cairn Energy PLC's plans to sell a stake in its Indian unit to Vedanta Resources PLC, the state-run explorer's chairman said Monday.

ONGC is waiting for U.K.-based Cairn Energy to complete all formalities related to the transaction, such as getting shareholder approval, before its board takes it up for consideration sometime in September, A.K. Hazarika said.

ONGC owns a 30% stake in India's largest onshore oil find in the northwestern state of Rajasthan, where Cairn India Ltd. is the operator with a 70% holding. Cairn Energy, which owns 52.1% of Cairn India, is waiting for the approval of Cairn India's shareholders and ONGC to sell a 30% stake in its Indian unit to Vedanta.

Cairn Energy has requested ONGC for a no-objection certificate by Sept. 21.

"We have received the request," Mr. Hazarika said, adding that Cairn Energy has "in principle" agreed to the conditions set by the government to approve the sale, but it hasn't completed the formalities yet.

The government approved on June 30 Cairn Energy's proposal for the transaction on condition that the partners in the Rajasthan block will share the royalty paid to the government on oil sales and Cairn India will withdraw arbitration against the government on tax on crude sales.

At present, ONGC pays the entire royalty though it is a minority partner.

Cairn India had said it would announce on Sept. 14 the results of a shareholder vote on the conditions set by the federal government.

A Cairn India spokesman Monday declined to comment.

Meanwhile, Mr. Hazarika said ONGC's board will likely on Aug. 29 consider a plan to file the prospectus for the explorer's upcoming share sale.

He said the proceeds from the share sale may not be as much as previously expected because of weak equity markets. "But, a good amount of money should be realized," he added.

The Indian government, which owns 74% of ONGC, plans to sell a 5% stake in the explorer to raise funds for social-sector programs.

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