Government’s nod for the proposed $8.5-9 billion stake sell by Cairn Energy to Vedanta

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Resources is likely to be delayed by another one month. Oil ministry is likely to decide on the multi-billion dollar deal by the end of current financial year instead of February as expected earlier.

“We have to move with caution. There are too many complications. We will decide by the end of this financial year,” oil minister Murli Deora told newsmen in New Delhi on Monday.

Earlier, petroleum secretary S Sundareshan on November 29 said, “They (Cairn Energy) only applied on November 26 and the timeline is, it will take two to two-and-half months to decide.” On October 15, Sundareshan has said that government may take a decision by end of December.

Cairn Energy holds 62.36 per cent stake in Cairn India. It wants to sell 40-51 per cent stake in its India unit to Anil Agarwal promoted Vedanta Resources. Cairn India has 10 exploration blocks under its ambit.

In addition, a senior oil ministry official told Financial Chronicle that Vedanta will have to sign an undertaking that the company will meet all technical standards required for oil exploration.

Oil regulator, Directorate General of Hydrocarbons (DGH), is in the process of deciding the most important technical eligibility criteria that Vedanta will have to obey before foraying into upstream business.

“Cairn India drills oil from the country’s most prolific onshore block (Barmer block, Rajasthan) with a current production of 125,000 barrels of oil per day (bpd). There cannot be any compromise on the oil production. They (Vedanta) have to meet all technical standards,” the oil ministry official said.

Vedanta, listed in the London Stock Exchange, is primarily a mining company. It has no prior oil and gas experience. If the deal goes through, Vedanta will make its foray into exploration and production business.