The Indian Government has refused to extend Vedanta Cairn Oil and Gas’ contract for the Cambay basin oil and gas block CB-OS/2.
Vedanta Cairn, a subsidiary of Vedanta, was the operator of the block with 40% stake. State-owned Oil and Natural Gas Corporation (ONGC) holds 50%.
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According to ONGC’s filing, the Ministry of Petroleum and Natural Gas rejected the extension request. However, no reason has been provided.
The production sharing contract (PSC) for the CB-OS/2 block, which includes the Lakshmi and Gauri fields, expired on 30 June 2023.
Despite the lapse of the PSC, Vedanta continued operations while awaiting a decision on its extension application, reported the Economic Times.
The block, which produces 3,400 barrels of oil and 340,000 standard cubic metres of gas daily, now reverts to government control.
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By GlobalDataONGC now takes control of the oil and gas-producing block.
Originally, Tata Petrodyne held a 10% stake in the block, which was sold to Invenire Energy in 2019.
While the CB-OS/2 contract was not renewed, Vedanta Cairn received a ten-year extension for its Rajasthan and Ravva blocks, extending their PSCs to 2030 and 2029, respectively.
A Vedanta Cairn Oil & Gas spokesperson was quoted as saying: “The contractors of the said block were ONGC, Vedanta and Invenire.
“ONGC was the largest shareholder with a 50% stake, and the remaining stake was shared between Vedanta and Invenire. The block contributed less than 0.3% to the overall EBITDA [earnings before interest, taxes, depreciation and amortisation] of Vedanta.”
This news follows the ministry’s objections to the company’s proposed demerger during a recent National Company Law Tribunal hearing.
The government criticised the demerger plan for inadequate disclosure of liabilities, particularly regarding the Rajasthan block, and potential difficulties in recovering dues if the company faced liquidation, said the publication.
The ongoing disputes between the government and Vedanta Cairn also involve disagreements over petroleum profit calculations from the Rajasthan block.
Despite the setback, Vedanta pursued development plans for the block’s discoveries, Gauri and Lakshmi fields, in 2019.
In a separate development, ONGC and Oil India announced plans for a stratigraphic drilling campaign, worth $385.5m (Rs320bn), in untapped offshore areas next year.
