Cambay Basin Block Row: ONGC Yet to Take Control as Vedanta Challenges Govt Move

New Delhi, May 28: State-owned Oil and Natural Gas Corporation (ONGC) has yet to take operational control of the Cambay basin block CB-OS-02 in Gujarat after Vedanta challenged the government s decision not to extend the block’s contract term.

The Ministry of Petroleum and Natural Gas through a September 19, 2025 directive rejected an extension of the contract for the block in which ONGC holds a 50 per cent participating interest. Vedanta holds 40 per cent and Invenire Petrodyne Limited holds 10 per cent.

Following the government’s decision, ONGC said it was instructed to immediately take over operations of the block and deployed an operational team to Suvali in Gujarat from September 20, 2025. However the company said Vedanta has not yet handed over operations.

Pursuant to the Government of India directive, ONGC requested Vedanta for the immediate handover and deployed its operational team at Suvali Gujarat from September 20 2025. However Vedanta has not yet handed over the operations, ONGC said in notes to its FY26 earnings statement.

According to ONGC, Vedanta filed a writ petition before the Delhi High Court on September 22, 2025 challenging the said rejection of the extension of the terms of the contract.

The court asked the respondents to file their response/counter affidavit and directed them to maintain the status quo in the matter. Further all the hearings have been completed on May 18, 2026 and the matter has been reserved for order by the court, it said.

Pending the outcome of the proceedings, Vedanta continues to act as the operator for the block, ONGC said. The company remains in preparedness to assume operational control of the block as and when directed by the Government of India.

“The courts have ordered the parties to maintain status quo. We cannot comment beyond this as the matter is sub-judice,” a Vedanta Cairn spokesperson said.

Vedanta Cairn Oil and Gas, a unit of Mumbai-listed Vedanta Ltd was the operator of the Gujarat offshore block CB-OS/2 with a 40 per cent stake. The Ministry of Petroleum and Natural Gas has in a September 19, 2025 letter informed the partners that the application to extend the production sharing contract (PSC) for CB-OS/2 has not been accepted.

While no reasons were stated for the move, ONGC was asked to take over the operations in the interim period.

What is Production Sharing Contract (PSC)

PSC is an agreement between the government and a resource extraction company. It gives the company time-specified right to explore develop and produce resources in exchange for a pre-agreed share of the produced output (known as profit petroleum) once costs are recovered.

The CB-OS/2 block which holds Lakshmi and Gauri fields and produces about 3 400 barrels of oil per day and 3.4 lakh standard cubic metres of gas per day was one of the three properties operated by Cairn India when billionaire Anil Agarwal s group acquired the firm in 2011 for USD 8.67 billion.

The other assets of Cairn India were the Barmer oil fields in Rajasthan and the Ravva oil and gas fields in the Krishna Godavari basin off the Andhra coast.

Cairn India was merged into Vedanta Ltd in 2017.

Vedanta Cairn Oil Gas spokesperson had in September last year stated that the block contributed less than 0.3 per cent to the overall EBITDA of Vedanta.

The PSC for CB-OS/2 block was signed on August 30 1998 and the contract expired on June 30 2023. The Vedanta-led consortium continued to operate the block during the pendency of its application for extension of the PSC.

After the PSC extension was rejected the block had to return to the government.

Prior to the denial of extension for CB-OS/2 the government had extended the contracts for Vedanta Cairn’s two other blocks – a 10-year PSC extension was approved for the Rajasthan block RJ-ON-90/1 till May 14, 2030 and a similar period was given for the PKGM-1 block more commonly known as the Ravva field till October 27, 2029.

According to a DeGolyer and MacNaughton reserve report commissioned by Vedanta Cairn in 2019, CB-OS/2 block s two discoveries Gauri and Lakshmi held a total in-place reserves of 13.6 million barrels of oil and oil equivalent gas.

While the block PSC expired Vedanta Cairn had pressed ahead with its development plan for the discoveries in the 3 314 square kilometre shallow water block.