Cairn made the offer to sell-off its 22.5 per cent stake in the Ravva oilfield, which produces about 50,000 barrels of crude oil per day, and majority ownership in RJ-ON-90/1 block in Rajasthan, where more than a dozen discoveries have been made establishing over 1 billion barrels of in place oil reserves, in December 2005, industry sources said.
The $3.8-billion asking price was also for Cairn's interest in Cambay Basin block CB/OS-2, home to 130 million standard cubic feet per day producing Lakshmi and Gauri gas fields and a potential oilfield. However, Cairn's Bangaldesh assets are not part of the deal.
Sources said ONGC found the asking price "too high" and has put a figure of $2-2.2 billion. While ONGC chairman Subir Raha was unavailable for comments, Cairn Energy spokesperson David Nisbet said "it was not the company policy to comment on market rumours."
Sources said the relatively small Cairn, did not have the $2-billion required for developing the Rajasthan oilfield and building the refinery to process the crude, was also planning an IPO to raise finances and list the Indian subsidiary on local bourses in a years time.
ONGC is already partnering Cairn in Ravva and Cambay basin fields and had proposed to jointly build a Rs 8,000 crore ($1.8 billion) refinery at Rajasthan.