NEW DELHI -(Dow Jones)- Cairn Energy PLC (CNE.LN) said Sunday the
proposed stake sale in its Indian unit to Vedanta Resources PLC
(VED.LN) is expected to close by April 15, after a meeting with
federal government officials to hammer out a resolution was
inconclusive.

Cairn Energy said “constructive discussions” on the deal took
place in New Delhi with officials from India’s oil ministry and
upstream regulator but didn’t say whether any concrete decisions
were taken.

The company is awaiting regulatory approval to sell up to 60% of
Cairn India Ltd. (532792.BY) for as much as $8.5 billion to
London-listed mining conglomerate Vedanta, which is controlled by
Indian billionaire Anil Agarwal.

The deal was proposed in August last year but hasn’t closed due
to slower-than-expected government approvals. While both Cairn
and Vedanta have previously said they expect to close the deal by
the end of the first quarter, India’s oil secretary had earlier
said a resolution was possible by December 2010. He later said a
decision was likely by the end of February.

State-run explorer Oil Natural Gas Corp. Ltd. (500312.BY),
which holds a stake in Cairn India’s key producing asset in the
northwestern state of Rajasthan and most other blocks, has
maintained that it has pre-emptive rights in the blocks jointly
held with Cairn and that the deal needs its consent.

ONGC is seeking to settle an issue about royalty payments on
crude oil output from the assets in northwestern India before the
government approves the Cairn-Vedanta transaction.

It pays 100% royalty on production, including Cairn India’s
share, as a part of the government’s earlier scheme to give
incentives to private companies to attract investment and is
seeking even sharing of the royalty.

“We hope to move forward to a positive solution,” Oil Secretary
S. Sundareshan said after the meeting with Cairn and Vedanta.
“The discussions were in a positive frame of mind.”

He said the government received final applications for approval
from Cairn Energy toward the end of November. Vedanta and ONGC
couldn’t be immediately reached for comment.

Cairn India’s key producing asset is the RJ-ON-90/1 oil block in
Rajasthan state with production of 125,000 barrels a day that
accounts for about 17% of India’s total crude output. Cairn India
owns a 70% stake in the Barmer block, while ONGC holds the
remaining 30%.

-By Saurabh Chaturvedi and Eric Yep, Dow Jones Newswires;
91-22-6145-6110; eric.yep@dowjones.com