The board of India state-run explorer Oil & Natural Gas Corp. Tuesday approved Cairn Energy Plc’s proposal to sell a majority stake in its Indian unit to miner Vedanta Resources Plc.
The board approved the transaction on the condition that both Cairn and Vedanta agree to share royalties on crude oil output from a joint venture block in northwest India, and withdraw a tax arbitration case.
ONGC owns a 30% stake in India’s largest onshore oil find in Rajasthan state, where Cairn India Ltd. is the operator with a 70% holding.
Cairn Energy, which owns about 52% of Cairn India, has been awaiting clearance from ONGC to sell a 30% stake in the local unit to London-listed, India-focused miner Vedanta.
Despite owning a 30% stake in the Rajasthan field, ONGC has been paying the entire royalty on production. The Indian government on June 30 approved Cairn Energy’s proposal to sell a stake on condition the partners in the Rajasthan block will share the royalty paid to the government on oil sales and Cairn India will withdraw arbitration against the government on tax on crude sales.
