ONGC Royalty Issue

Hi I am interested in knowing the information about the query raised by ONGC on the royalty issue before finalising the deal between Cairn India and Vedanta Resources Plc.'s?

[sumit]

Oil controller the Directorate General of Hydrocarbons (DGH) and Petroleum Ministry have declined to stand firm on ONGC's request to recoup sovereignty it pays on oil delivered from Rajasthan obstruct, an issue that has undermined to wreck Vedanta Resources' $9.6 billion procurement of Cairn India.

Oil and Natural Gas Corporation (ONGC) claims 30% in Cairn India's backbone Rajasthan piece yet is at risk to pay sovereignty on the whole yield from the field. The state-claimed firm now needs to recoup the statutory exact it pays from deal continue of Rajasthan unrefined petroleum.

The Management Committee (MC), which other than Cairn and ONGC includes delegates of the service and DGH, talked about ONGC's request at a meeting on January 24,

UK's Cairn Energy Plc is offering the vast majority of its 62.4% stake in Cairn India to mining bunch Vedanta. Acknowledgment of ONGC's request would bring down productivity of Cairn India.

At the MC meeting Cairn India sited articles of Production Sharing Contract (PSC) for the Rajasthan piece to vociferously express that sovereignty does not fit the bill to be a piece of venture cost, which can be recouped from offer of oil.

According to PSC, all working and capital use is permitted to be initially recuperated from offer of oil or gas and benefits for the partners, including the administration be computed from there on.

Taken a toll recuperation of sovereignty would antagonistically influence the monetary interests of the administration, Cairn India expressed.