The battle between Anil Agarwal-led Vedanta and the government over the terms of extension of production sharing contract for the company's Rajasthan block has taken a fresh twist now, with both the parties agreeing to increase the government's share of profit by 10 per cent, until the ongoing legal battle gets over.
The case is currently before a Division Bench at the Delhi High Court that asked the ministry of petroleum in September to take a call on Vedanta's application on the extension in two months time. "Since the legal process is going on and the case is likely to go to the Supreme Court, we have requested the government to give us extension with a 10 per cent increase in royalty as they wanted. Let the legal process take its own course. Whatever the verdict of the court, we will accept that," said Anil Agarwal, chairman of Vedanta Resources.
In March 2017, the government had come out with a new policy on extension of PSC, based on which a company would get an extension beyond the initial 25-year contract period only if the government's profit share was increased by 10 per cent. Later, this went into a legal battle at the Delhi High Court, on which a single Bench in June ruled in favour of Vedanta, directing the Centre to extend the PSC till 2030 to produce oil from the Rajasthan block. This was put on hold by the Division Bench.
The current production sharing contract of the Barmer block will be expiring in May 2020, while that of the Ravva block expires in December 2019.
As per the company estimates, it has recoverable reserves of approximately 1.2 billion barrels of oil equivalent, of which 466 million BOE can be recovered if the tenure of the existing PSC was extended till 2030.
Signs OALP contract
The government on Monday signed contracts with six companies for the 55 oil and gas blocks that were on offer under the first round of Open Acreage Licensing Policy (OALP). Out of this, 41 blocks were given to Vedanta, while Oil India got nine blocks. The remaining blocks were shared between Oil and Natural Gas Corporation (two blocks) and Hindustan Oil Exploration Company, Bharat Petro Resources and Gail India with one block each.
Addressing the event, Petroleum Minister Dharmendra Pradhan said the government expects reserves worth around Rs 1.45 trillion in these 55 blocks. "For these blocks, we have already got firm investment commitment of Rs 59 billion in the exploration stage only," Pradhan said.
Meanwhile, Agarwal added that his company will invest around Rs 40 billion at the exploration stage and if it becomes successful in finding oil, the investment figure might go up to $4 billion (Rs 291 billion) in later stages. Agarwal's company is currently the largest private sector oil producer in India, with a daily production of 230,000 barrels of oil. The company is targeting to increase this production to 450,000 barrels in the next three years with an investment of around Rs 280 billion lined up for the Rajasthan block. Where things stand
- The current production sharing contract of Barmer block will be expiring in May 2020, while that of Ravva block expires in December 2019.
- Company expects recoverable reserves of approximately 1.2 billion barrels of oil equivalent, of which 466 million BOE can be recovered if it gets extension till 2030