Vedanta contract for Raj Oilfield extended

The government has extended Vedanta's contract for the prolific Rajasthan oilfield by a further three months, and not by 10 years that the company has been seeking, pending settlement of a dispute over $520 million cost recovery. The original 25-year production sharing contract for the Barmer block in Rajasthan ended in May last year and the government has since extended the contract several times by a few months. The latest extension would last until November, according to people familiar with the matter. The block, which started producing in 2009 and contributes about a fifth of the country’s total oil output, is controlled by mining magnate Anil Agarwal. A key hurdle for a regular 10-year extension has been Cairn’s refusal to pay up $520 million in additional profit petroleum to the government. Cairn has to clear all dues before the government agrees to a regular extension. Cairn launched an arbitration proceeding last year to challenge the government demand for additional profit petroleum. It was followed by the government approaching the Delhi High Court in September to secure its money. A final resolution is awaited. The government demand was triggered after an audit flagged discrepancy in cost recovery claims by Vedanta in 2016-17 with respect to the Barmer block. Lower cost recovery by Vedanta can boost the government share in profit petroleum. Cairn has also run into a dispute with state-run ONGC, a 30% partner in Barmer, over investments made in the block.Meanwhile, Vedanta’s oil and gas production has fallen to 165,000 barrels of oil equivalent per day (kboepd) in the first quarter of the current fiscal year from 187,000 boepd in the same period in 2017-18.

from Economic Times https://ift.tt/3mONANu