Indian bid 'to counter Vedanta Resources-Cairn deal'

Saga: Anil Agarwal, chairman of Vedanta
11 April 2012

Vedanta Resources faces a rival in its proposed $9.6 billion (£6.4 billion) deal for Cairn India, sources claimed today.

Indian state-owned Oil and Natural Gas Corp, Oil India and GAIL may make a joint bid to counter London-listed Vedanta's proposed offer to buy a majority stake in the oil and gas producer owned by Britain's Cairn Energy, reports in the country said.

India's Mint newspaper also said Vedanta's deal may be scuppered by India's petroleum ministry, which wants ONGC to be given a chance to buy the holding.

ONGC, Oil India and GAIL have held informal talks on a joint bid for Cairn India as the ministry is looking at legal options to deny Vedanta approval for its planned deal, according to the Press Trust of India.

The consortium would be led by ONGC with a 50% stake, while GAIL and Oil India would hold stakes of 20-25%, the report said. The ONGC is said to have informal commitments for up to $10 billion in funding.

GAIL and ONGC declined to comment, and Oil India could not immediately be reached.

A spokesman for India's oil ministry was not immediately reachable.

Last week Vedanta said it would spend close to $10 billion to buy a majority stake in Cairn India, which began pumping crude from its block in the Mangala oil field in the western state of Rajasthan last year, the first major crude oil discovery in India in two decades.

The firm holds a 70% stake in the Rajasthan oil block, called RJ-ON-90/1, while ONGC holds the balance.

Cairn's deal with Vedanta needs official approval because Cairn India has production-sharing contracts with the government for oil and gas exploration blocks. Approval from partner ONGC is also crucial.

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