* Majority stake will allow ENOC to vote against dividend
* ENOC to lower Dragon Oil's near-term production target
* Dragon Oil reiterated its production target on Tuesday (Adds Setanta's comments, link to Dragon Oil's Tuesdaystatement)
By Mamidipudi Soumithri
July 16 (Reuters) - Dragon Oil Plc's largestshareholder, Emirates National Oil Co Ltd (ENOC), said the oilproducer no longer needed to pay a dividend to shareholders,stepping up pressure in its bid to take over the company.
ENOC, which owns 54 percent of Dragon Oil, offered 750 penceper share to buy out minority shareholders in June. BaillieGifford and Setanta Asset Management, Dragon Oil's second andthird largest shareholders, see that offer as inadequate.
ENOC's majority stake in Dragon Oil would allow it to voteagainst any proposal to pay dividends at the company's annualgeneral meeting.
First Energy analyst Stephane Foucaud said ENOC's statementcould be part of a strategy to convince hesitant shareholders toaccept its offer.
The takeover would help downstream-focused ENOC become afully-integrated global oil and gas company.
Dubai-based ENOC also said Dragon Oil's capital expenditurebudget of $700 million would not be enough to deal with theoperational challenges that it expects Dragon Oil to face.
Dragon Oil, which produces oil from the Cheleken field inTurkmenistan, reiterated on Tuesday its production target of100,000 barrels of oil per day over the next five years. ENOCsaid it would lower that target in the near-term to about 90,000barrels.
Setanta, which has a 3.1 percent stake in the company, saidENOC's target was not reflective of Cheleken's potential, addingthat Dragon Oil's production update supported its view.
"It certainly does not seem consistent with the type ofscenario to which ENOC refers," Setanta's Richard Doyle said,referring to Dragon Oil's statement.
Dragon Oil declined to comment, while Baillie Gifford, whichholds about 7.2 percent of the company, said its stance remainedunchanged.
The company's shares were trading marginally higher at 726pence at midday on Thursday. (Additional reporting by Abhiram Nandakumar in Bengaluru;Editing by Anupama Dwivedi)
