ONGC, Gail not to counterbid Vedanta on Cairn

ONGC, Gail not to counterbid Vedanta on Cairn

New Delhi: State-run energy firms Oil and Natural Gas Corp, Gail India and Oil India will not make a counterbid for Vedanta Resources’ $9.6 billion stake purchase in Cairn India, a senior official in petroleum oil ministry told Reuters.

“There is no chance for a counter bid by Indian firms as the valuation done by Vedanta for Cairn India is already very high," the official said on Wednesday. He declined to be named as he was not authorized to speak publicly.

Last week, India-focused miner Vedanta said it agreed to spend up to $9.6 billion to buy a majority stake in Cairn India from its UK-based parent Cairn Energy.

]Previously, an oil ministry source had said all options were open for Indian state-run firms on Cairn India and domestic media reported the firms had held informal talks on a joint bid.

ONGC, Oil India and Gail declined comment on Wednesday.

The deal needs government approval because Cairn India has production-sharing contracts (PSCs) with the government for oil and gas exploration blocks and the agreement says any ownership change would need approval.

Cairn India shares ended 2.8% lower on the Bombay Stock Exchange after rising more than 3% on Tuesday on market chatter of a likely counter offer by the state firms.

Approval from state-run explorer ONGC, which has a 30% stake in Cairn India’s oil block called RJ-ON-90/1 in Rajasthan, is also crucial for any change of ownership.

The commerce and industry minister said on Tuesday Oil and Natural Gas Corp should have a say in the deal.

Vedanta, in its first move into the energy sector, is buying a controlling stake in India’s No. 4 oil and gas company from Cairn Energy to capitalise on rising energy demand, economic growth and an expanding population.

On Tuesday, the government rejected a plan by Vedanta to mine bauxite in Orissa over environmental concerns, a blow to the firm already facing hurdles to its planned energy deal in the country.

Cairn Energy chairman Bill Gammell arrived in New Delhi last week and held talks with Indian officials for the acquisition.

Vedanta has offered Rs405 a share to buy between 40 and 51% of Cairn India.

The final stake bought would depend on the response to an open offer for a 20% stake made to minority shareholders at Rs355 a share. That offer opens on 11 October.