The deal between Reliance Industries and BP is expected to sail through smoothly without

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regulatory hurdles unlike the Cairn-Vedanta deal.

Soon after the multi-billion dollar deal was made public in London, oil secretary S Sundareshan said, “These are all NELP blocks (acreages auctioned under new exploration licensing policy) where participating interest, if any, has to be transferred to a third party, it has to be with the permission of the government. As and when they apply with us, we will examine it and take a view as we go along.”

Reliance Industries ch­a­irman and Asia’s richest person Mukesh Ambani said in a conference call from London that the agreement was subject to necessary government approvals.

“We expect to apply for government approval so­on,” he said.

Oil and gas blocks auctioned under Nelp regime have clearly outlined procedures for farming in and farming out of stakes, said RS Sharma, former chairman and managing director of ONGC. “I see this transaction going on very smoothly,” Sharma added. In 2004, Cairn India farmed out 90 per cent of its interest in a block (KG-DWN-98/2) to government-owned ONGC. The regulator, Directorate General of Hydrocarbons, approved the deal.

In the contrary, proposed stake sale by UK-based Cairn Energy PLC in its Indian subsidiary have landed in Union Cabinet’s table for approval. The deal was announced in August last year.

After announcement of the deal, Cairn Energy denied to seek government’s approval saying it is corporate transaction and not a transfer of stake in the blocks. However, in last week of November 2010, Cairn Energy sough permission for 10 blocks under its ambit.

State-run explorer ONGC, which is Cairn’s partner in eight exploration blocks, have urged Centre to decide on royalty issue before clearing the deal. Currently, ONGC pays the royalty on behalf of Cairn for the Barmer block in Rajasthan. The block was offered prior to auctions under NELP regime.

Both the companies are in different views on whether the royalty should be ‘cost-recoverable.’ ONGC has urged the government to resolve royalty issue before giving its nod for the proposed equity sale. Otherwise, ONGC will bleed by nearly Rs 14,000 crore for paying entire share of royalty over lifetime of most prolific onshore block in the country.

Edinburgh-based Cairn Energy is seeking regulatory approval from oil ministry and market regulator Sebi to sell 40 - 51 per cent stake in its Cairn India to Anil Agarwal promoted London-based Vedanta Resources for $ 8.5 - 9 billion. Cairn Energy holds 62.36 per cent stake in Cairn India.