Delhi HC upholds Centre’s move to take Gujarat offshore block from Vedanta

Vedanta Ltd’s bid to retain its offshore oil and gas block in Gujarat failed after the Delhi High Court on Wednesday upheld the Centre’s decision to reject the company’s contract extension and hand over the asset to state-run Oil and Natural Gas Corporation Ltd (ONGC).

Justice Purushaindra Singh Kaurav dismissed Vedanta’s appeal against the Petroleum and Natural Gas Ministry’s order rejecting its request for 10-year extension of the production sharing contract (PSC) for the CB-OS/2 offshore block in Gujarat’s Cambay Basin.

The decision also approved the Centre’s order to Vedanta to stop its oil activities and hand over the block to ONGC.

Soon after the verdict was announced, Vedanta’s senior lawyer Jayant Mehta sought continuation of status quo and interim protection to allow the company to challenge the verdict before a high court. The court rejected the request, paving the way for the government to implement its decision.

An email query sent to Vedanta seeking its response remained unanswered by press time.

According to the reviewed decision text MintIn the case, the apex court held that though Vedanta’s petition was maintainable, the company was not entitled to extend its PSC under the Centre’s New Exploration License Policy (pre-NELP) 2017 policy regulating oil and gas blocks. The policy did not automatically grant an extension even if the government delayed deciding on the application, the court said.

It also held that the central government, being the steward of the country’s natural resources under the Public Trust Doctrine, has the right to consider not only the technical suitability of the applicant but also his conduct before granting an extension.

In the decision, it was noted that the company made unilateral cuts. ₹It took Rs 88 crore ($9.33 million) from the government’s share in Profit Petroleum to adjust the Special Additional Excise Duty (SAED) liability, despite being instructed not to do so.

“Since there is no express impediment to taking into account events subsequent to the submission of the application, the State is within its right to examine whether a particular applicant has taken certain actions under the Extension Policy that would deprive him of his right to benefit from the exploitation of the country’s reserves,” the court stated.

PSC allows an oil and gas company to explore and produce hydrocarbons from a designated block in exchange for sharing production and revenue with the government.

Vedanta shares fell on this news, trading ₹262.10 apiece on the National Stock Exchange as of 11:03 am Indian time. The stock opened at: ₹264.85.

How did it come about?

The dispute centers on the CB-OS/2 offshore oil and gas block off the Gujarat coast near Suvali in Surat district. Vedanta has been operating the field since 1998 under the production sharing agreement signed with the Center and consortium partners including ONGC.

According to a PTI According to the report, CB-OS/2 block, which hosts Lakshmi and Gauri fields, produces around 3,400 barrels of oil and 3.4 lakh standard cubic meters of gas per day.

The original PSC expired in June 2023. Before it expired, Vedanta applied for a 10-year extension under the Centre’s 2017 policy; This policy permits the extension of certain pre-New Exploration License Policy (pre-NELP) oil and gas contracts, subject to certain conditions.

While the application was pending, the government allowed Vedanta to continue operating the field through a series of temporary extensions.

This changed in September 2025, when the Center rejected the extension request, citing allegations of unpaid dues and non-compliance with the 2017 policy. It directed Vedanta to immediately cease operations, vacate the block and transfer its assets to ONGC on an “as is” basis.

Vedanta challenged the decision in the Delhi High Court, arguing that it had applied for an extension long before the contract expired and that although it allowed the company to continue operating the field, the government took several years to decide on the application.

The company claimed that the dues claimed by the government were disputed, that some liabilities were related to the consortium partners, and that it later protested and paid the disputed amounts to avoid further disputes. Vedanta also argued that a sudden shutdown of its offshore oil and gas operations would be operationally difficult and unsafe.

The Center argued that the extension under the 2017 policy was voluntary rather than a matter of rights. He argued that Vedanta did not meet the policy conditions and that denying the extension request was lawful and in the public interest.

In January, the apex court had granted interim relief, directing both parties to maintain status quo, restraining the Center from transferring the block to ONGC while the case was pending.