Indian finance ministry had suggested a 5 percent stake sale in ONGC in a draft proposal to a cabinet panel. It is not clear how much stake the government would eventually put on sale. The government owns nearly 69 percent of ONGC.
A government official said that the process of hiring bankers would be started soon.
An ONGC spokesman was not immediately available for comment.
Prime Minister Narendra Modi's government is expected to announce plans for up to a record $11.7 billion of stake sales in state-run firms in its maiden budget on Thursday, as it looks to bolster state finances.