ONGC on Thursday told the stock exchanges that UK-based Cairn Energy needs its consent for the $9.6-billion deal with Vedanta Resources for selling controlling stake in Cairn India. ONGC said it has the option of exercising the right of first refusal with respect to the participating interest that Cairn India and its affiliates have in hydrocarbon assets in the country.
Cairn Energy chief executive Bill Gammell had earlier this month said while ONGC has pre-emptive rights over the transfer of assets by Cairn India, it doesn?t have any such rights in case of a stake sale in the company.
When contacted, a Cairn spokesperson told FE, ?Cairn has always said that we will take the necessary consents and approvals and work in a consensual way to process this transaction.?
Cairn Energy holds stake in seven assets in the country including the Barmer field in Rajasthan as per the data provided by the director general of hydrocarbons. ONGC holds 30% participating interest in the Barmer field besides stakes in other Cairn India hydrocarbon assets. Cairn Energy owns 62.36% of Cairn India.
The Barmer field, which represents India?s largest onshore oil discovery in the last quarter of a century, is expected to produce 1,75,000 barrels of oil a day by next year as per its approved plan and can increase it by two-fifth.
The PSU, however, ruled out countering Vedanta?s Rs 405 a share offer, which has been approved by the Cairn Energy board.
?The last date for making a counter bid was October 7. So there is no question of making a counter bid now,? ONGC chairman and managing director RS Sharma told FE.
Sharma, however, declined to comment on whether ONGC would agree to Cairn Energy ceding control in its Indian business if some other acquirer with expertise in operating oil and gas fields comes into picture.
?This is a sensitive issue, I cannot comment further,? Sharma said.
Vedanta, which is into mining, has no experience in hydrocarbons, although both are extractive industries and face similar challenges.
ONGC?s assertion of its rights comes after it received a favourable opinion from the solicitor general, who said oil and gas fields are national resources and cannot change hands without the consent of the government and its wings.