The Sudanese government is believed to have vetoed Malaysian oil major Petronas' move to buy Talisman Energy in Greater Nile Oil Project and has favoured state-run ONGC Videsh Ltd for picking the Canadian firm's 25 per cent stake.

David Mann, manager, investor relations & corporate communications, Talisman Energy Inc, said, "The government of Sudan has given consent and approval in-principle and stated its support of the sale to OVL."

However, all necessary consents and approvals would take another 7-10 days. OVL, the overseas arm of Oil and Natural Gas Corporation, is likely to sign the contract and pay $720 million to Talisman next month.

"There has been some delay but we have made a lot of progress and we should complete the transaction in February," an official in India's oil ministry told Reuters.

Stating that substantial progress has been made towards obtaining the necessary consents and approvals, Mann said in the absence of all requisite consents, the sale would not be completed by Friday as previously anticipated.

Indian officials said ONGC was close to finalising the deal but public holidays could delay the transaction.

The deal was referred to the Sudanese government after partners in the project Petronas (25 per cent) and CNPC of China (40 per cent) exercised their contractual first right to buy, sources said, adding, Sudanese law does not permit any foreign company to hold more than 40 per cent interest in any field.

Sources said OVL would take over all the 80-odd employees of Talisman to step into the Canadian firm's job of managing the 1,500-km pipeline connecting the producing fields to Port Sudan on the Red Sea.

Talisman was expected to sell its $758-million stake in the project to ONGC by January 31, but the Canadian company said late on Thursday that its other partners in the venture had not yet approved the sale.

Human Rights

The transaction, partly aimed at freeing Talisman from years of criticism from human rights groups and factions of the US government over its involvement in Sudan, was first slated to close by the end of 2002, but Talisman said in late December that the approval process was taking longer than expected.

Human rights and church groups have said Sudan's oil project was giving the government financial muscle to continue a two-decade civil war against mostly Christian and animist rebels in the African country's south.

Talisman announced the sale last autumn, saying that the political risks, which had pressured the company's stock price, outweighed impressive financial returns.

But ONGC, which has not faced any opposition to the acquisition of a stake in the 250,000-barrels-a-day project, finds the deal lucrative.

"It is a very, very good property. Even if the oil price is below $20 a barrel, ONGC would recover its investment in five years," an oil ministry official said.

ONGC is scouting for stakes in foreign fields to make up for declining output in India, which imports more than two-thirds of its crude oil needs for its 17 refineries that process 2.3 million barrels per day.

Additional inputs: Reuters