Regulatory hurdles could delay Vedanta Resources' purchase of a stake of up to $9.6 billion in Cairn India, but the buyer and analysts see them as unlikely to derail the deal.

Vedanta, in its first move into the energy sector, is buying a controlling stake in India's No. 4 oil and gas company from Britain's Cairn Energy to capitalise on rising energy demand, economic growth and an expanding population.

The deal will need the Indian government's approval because Cairn India has production-sharing contracts (PSCs) with the government for its oil and gas exploration blocks. According to their agreement, any change of ownership would require the government approval.

Approval from state-run explorer ONGC, which has a 30 percent stake in Cairn India's Rajasthan oil block called RJ-ON-90/1, is also crucial for any change of ownership at British firm's Indian unit.

ONGC has not yet raised concerns on the Cairn India-Vedanta deal, Indian Oil Secretary S. Sundareshan said on Tuesday, adding the government would take into account ONGC's views on the deal.

Officials from ONGC were scheduled to meet with the Oil Secretary on Tuesday evening.

"We will certainly take into account views of ONGC before a decision is taken. ONGC has not raised any concerns with us yet for the reason that there is no official proposal before us," he told reporters in New Delhi.

Cairn Energy Chairman Bill Gammell arrived in New Delhi late Monday to speak with government officials in hopes of ironing out the approval process for the acquisition.

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In an interview with the Economic Times newspaper, Vedanta founder Anil Agarwal said ONGC would continue to remain a partner in Cairn India.

"Whatever approvals are needed, whatever needs to be done for such a deal, we'll do," said Agarwal, a billionaire former scrap metal dealer who built his mining empire through a series of bold acquisitions.

Analysts expected the deal would go through.

"There are regulatory issues and they can delay the process of the closing the deal, but I would be very surprised if they turn out to be deal-breaker," said Saeed Jaffery, a sector analyst with Ambit Capital in Mumbai.

"The key issue is if Vedanta is qualified enough to own a business that it has no experience in running. However, they are likely to retain the core management of Cairn India and if that comfort is given, it would not be a major concern," he said.

Gammell on Monday said the entire management team of Cairn India would remain intact.

Vedanta is buying between 40 and 51 percent of Cairn India from Cairn Energy, which owns a 62.4 percent stake, and will offer to buy up to 20 percent from other shareholders for a total stake of 51 to 60 percent.

"This acquisition involves natural resources and therefore the government would like to know the details of change of ownership before giving the go-ahead," said S.P. Tulsian, a Mumbai-based independent investment analyst.

"It's more procedural in nature."

Shares in Cairn India were up 1.6 percent at 338.10 rupees in the main Mumbai market  which was almost flat. The stock had risen as much as 2.4 percent earlier in the day, after falling sharply on Monday when the deal was announced.

Vedanta is offering Cairn India's minority shareholders 355 rupees per share for the additional stake of up to 20 percent. The offer opens on October 11.

Shares in Cairn Energy were down 2 percent in London, while Vedanta shares, which fell 20 percent last week on speculation of the deal, were little changed.

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