Asserting that oil and gas blocks are national assets and companies are merely contractors, the Petroleum and Natural Gas Ministry is of the view that the reported strategic stake sale of oil fields in Rajasthan by Cairn India to London-based Vendanta Resources could be allowed only with prior government permission that would come after proper scrutiny of the deal and its implications.
Officials in the Petroleum and Natural Gas Ministry said a third party could not be allowed to manage the national assets without government's permission. Petroleum Secretary S. Sundareshan has already made it clear that oil and gas assets are managed under a production-sharing contract (PSC) between the government and energy firms. There are provisions in the PSC that prior government permission would have to be taken before any change in ownership indicating that the government could closely scrutinise the deal.
Interestingly, Cairn Energy will also require consent of Oil and Natural Gas Corporation (ONGC), which is a 30 per cent partner in the Rajasthan oil fields. ONGC is likely to hold a board meeting to discuss the issue and take a final call. In the past also, ONGC had taken a serious offence of Cairn India unilaterally making announcement of increased estimates of oil and gas in its Barmer fields.
Cairn India Chief Executive Officer Rahul Dhir, who met Mr. Sundareshan on Friday, told reporters that Vedanta Resources could be a new strategic shareholder.
Cairn India operates two producing blocks (Ravva and CB/OS-2) where ONGC has majority participating interests. The company also holds seven exploration blocks in India and one in Sri Lanka.