Ending the confusion over signing deals under the Open Acreage Licensing (OALP-I), London Stock Exchange-listed Anil Agarwal-led Vedanta Resources has received shareholder and board approvals for signing contracts for 41 oil and gas blocks on October 1.
The company had to approach the shareholders because the deal with the government was considered a “related-party transaction” under British law. This comes when Agarwal is trying to delist Vedanta Resources from the LSE. Volcan Investments, a family-controlled entity of Agarwal, is buying stake worth around $1.03 billion, valuing Vedanta at $3.07 billion.
Volcan owns 67 per cent in the company and has offered $10.89 a Vedanta share.
The shareholders on September 19 cleared the revenue-sharing contract with the government with 95.99 per cent votes, while the company got clearance from its board for investment in the blocks.
“We have got stakeholder approval and are ready to sign contracts on the date scheduled," said a company executive. Though the programme was scheduled for September 6, the Directorate General of Hydrocarbons (DGH) had to cancel it barely 48 hours before the contracts were supposed to be signed. Later, it was rescheduled for September 24 but was postponed to October 1, said a person close to the development.
Government officials had cited Vedanta’s non-readiness as a reason for the last-minute cancellation because the firm had won 41 of 55 hydrocarbon blocks that were on offer during the current rounds.
However, an industry source stated the DGH might have gone ahead announcing the occasion without informing the companies concerned. “Since Vedanta is a London-listed company, it could get clearance only after the blocks were awarded, which happened in the latter half of August,” said an industry source.
During the exploration stage, the 41 blocks may require around $500 million. The current round grabbed attention after the country's largest player, ONGC, ended up winning only two blocks despite bidding for 30 blocks.
OIL, a state-run company, won nine blocks, while three companies — state-run GAIL (India), HOEC, and Bharat PetroResources — got one block each. The 55 blocks under OALP are spread across 10 sedimentary basins, covering 60,000 square km.
The current round is vital because India is targeting meeting a share of increasing demand through domestic production and targets to reduce imports by 10 per cent by 2022. India is the largest consumer of oil and petroleum products after the US and China.