Anil Agarwal’s Vedanta Ltd proposes to go ahead with a planned investment of $2.5 billion in its Barmer oil asset to enhance production.

Cairn Oil & Gas — a vertical of Vedanta Ltd — has given this assurance despite the company having difference with the government on the terms of contract for getting an extension as the operator of the Barmer asset.

The company’s existing contract expires in 2020 and it is seeking an extension for 10 years.

But, it wants it under the existing fiscal terms, while the Centre wants a higher share of profit in petroleum — almost 10 per cent higher — from the crude oil produced. The difference reached Courts, where the Delhi High Court struck down the Centre’s demand and directed the government to extend the contract at the terms sought by the contractor.

This order has been appealed by the Centre before a division bench of the Delhi HC.

Investments lined up

“The mater is sub-judice and it would not be correct on my part to comment on it. It comes up for hearing on September 3. We are on course with our investment commitments. We have signed the contract with the service providers, our chairman has been insisting that let’s just continue to invest in Rajasthan block and the extension will happen,” Sudhir Mathur, Chief Executive Officer of Cairn Oil & Gas – Vedanta Ltd, told BusinessLine .

“We have issued around $2.3 billion worth of contracts for Rajasthan already,” Mathur added.

The company is looking at increasing production and handling capacity, he said adding: “We are going to invest $2.5 billion in Rajasthan across multiple projects, which will give us a volume increase of about 150 thousand barrels in tight oil, tight gas. After seeing success in Mangla polymer we are extending it to Aishwariya and Bhagyam fields. We are also doing an Alkaline Subtracted Polymer in all the three fields and increasing the crude handling capacity at Mangala Processing Terminal to from about 880 thousand barrels a day to 1.3 million barrels.”

Diversifying asset base

In addition to investments in Rajasthan, it also wants to diversify its asset base and this is the reason why they have bid so aggressively during the Open Acreage bid rounds.

The company bagged 41 of the 55 blocks that were on offer, but most of the blocks that were bid for had just two participants, Vedanta and ONGC.

“It would have been great to see global investors come in as well. A few things such as allowing export of crude, and I doubt very much if it will be exported, but everyone likes an open market. This is because some of the largest producers in the world, like Shell, come from very open market economies and they expect to see that in other countries as well. Greater contract sanctity and trading freedom are a big boost,” Mathur said.

(The reporter was in Barmer, Rajasthan on the invitation of Vedanta Ltd)

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