India state oil firms may make counterbid for Cairn: report

23rd August 2010, Comments 0 comments

India's state-run fuel companies may make a counterbid for oil assets owned by Britain's Cairn Energy, which mining group Vedanta is seeking to buy, a report said Monday.

Last week, Britain-based mining giant Vedanta announced an offer worth up to 9.6 billion dollars for 51-60 percent of Cairn India, whose most important asset is the oil-rich Mangala field in the western state of Rajasthan.

The Press Trust of India said that state-run companies Oil and Natural Gas Corp (ONGC), OIL India Ltd (OIL) and GAIL have already lined up 10 billion dollars in loan commitments from international banks for the move.

The three firms have held informal talks on a counter-bid as the ministry examines legal options to deny Cairn approval for conclusion of its deal, the agency said, quoting sources with knowledge of developments.

The report came as India's Oil Minister Murli Deora said the government was still undecided on whether to push for a state takeover of oil assets owned by Cairn Energy.

The oil ministry is said to be concerned about Vedanta's bid as the London-listed company led by Indian billionaire tycoon Anil Agarwal has no experience in the energy field.

The government has written to Cairn Energy seeking details of the proposed deal and is awaiting its response.

"(An) official reply from Cairn is awaited," Deora told reporters.

The deal needs government approval because Cairn India has production-sharing contracts with it for oil and gas exploration.

Vedanta wants to make its first foray into the energy sector to take advantage of India's rising demand for energy for its fast-growing economy.

ONGC would be the leader of the consortium with at least a 50 percent share while OIL India and GAIL would each be 20 to 25 percent partners, the Press Trust of India said, quoting sources it said were familiar with developments in the field.

ONGC already has a 30-percent holding in Cairn India's Rajasthan oil block.

Cairn Energy Chairman Bill Gammell held talks with Indian officials in New Delhi last week to pitch for approval of the deal.'

© 2010 AFP

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