Essar Oil Limited (EOL) is expected to get the Ratna-R series oil and gas fields, with the department of economic affairs of the finance ministry clearing the proposal.

The department has written to the petroleum ministry that it "has no objection to the finalisation of the production-sharing contract (PSC) with Essar Oil subject to the approval of the law ministry and compliance of the required procedure."

The matter was discussed at a meeting of the negotiating team of secretaries held here on March 25. The meeting had deliberated on a letter from Essar Group's lenders, led by ICICI, stating that all charges on Ratna-R Series fields for funding its Vadinar refinery have been withdrawn.

The finance ministry's letter said the department of economic affairs had "no specific comment on the documents submitted by Essar Oil".

Essar Oil holds 50 per cent interest in the oil fields while Oil and Natural Gas Corporation (ONGC) has 40 per cent interest. The remaining is with Premier Oil of the UK. The fields are expected to generate an annual revenue of Rs 1,000 crore.

The fields were awarded to Essar in 1995 but the production-sharing contract could not be signed because of doubts about the firm's ability to finance the project.

Sources said Essar had also agreed to the government's condition of not assigning or transferring its participating interest or exit the contract until the development plan was achieved or for a period of three years, whichever came later.

Essar Oil will also furnish a bank guarantee in the first year, based on the annual expenditure it committed to in its bid.