Vedanta Oil & Gas Lost Cambay. Rajasthan Is the Bigger Number.
Vedanta Oil & Gas, the oil business demerged from Vedanta this year, produced 19% less in the September quarter than a year earlier. The headline reason is Cambay: the government refused to extend Vedanta's production-sharing contract, the Delhi High Court dismissed its challenge, and ONGC took over the block on 24 July. But Cambay accounts for only about a third of the fall. Most of it came from the company's core Rajasthan fields.
What the production release says
From the Q2 FY27 release ([PR]), average daily gross operated production, in thousand barrels of oil equivalent per day (kboepd):
| Block | Q2 FY27 | Q2 FY26 | Change |
|---|---|---|---|
| Rajasthan | 59.9 | 70.9 | −15% |
| Ravva | 8.1 | 8.2 | −1% |
| Cambay | 1.1 | 6.5 | −83% |
| OALP | 3.1 | 3.6 | −15% |
| Total | 72.2 | 89.1 | −19% |
Working-interest production, the company's own share, fell 18% to 47.8 kboepd.
Cambay: how the block was lost
From the release's footnote and the 22 July disclosure ([PR], [HC]):
- On 19 September 2025, the petroleum ministry told the block's three-party joint venture, with Vedanta as operator, that its application to extend the production-sharing contract "hadn't been accepted".
- Vedanta challenged that in the Delhi High Court. The writ was dismissed on 22 July 2026, and Vedanta has appealed to a Division Bench. The matter is "presently sub-judice".
- On the ministry's directions, "ONGC has taken over the complete operations of the Block from 24th July 2026". Cambay output is counted only until 21 July.
The Q1 results had already booked a "provision for Cambay impairment" among exceptional items ([Q1]). The filing does not give the amount.
Rajasthan: the bigger number
Our arithmetic on the gross operated figures: total output fell by 16.9 kboepd.
| Block | Fall (kboepd) | Share of the fall |
|---|---|---|
| Rajasthan | 11.0 | ≈ 65% |
| Cambay | 5.4 | ≈ 32% |
| OALP and Ravva | 0.6 | ≈ 3% |
The company puts Rajasthan's fall down to "natural decline", partly offset by work at Ravva. It says it is "Arresting Base decline" through optimisation and enhanced oil recovery projects in mature fields ([PR]).
The other open matters
The new company carries several disputes, each disclosed in July ([DGH], [ONGC]):
- Four OALP blocks: the Directorate General of Hydrocarbons has refused to extend four blocks and is seeking liquidated damages with interest. The company disputes this and has asked for conciliation. The amount is not stated. In Q1 it wrote off exploration costs on these four blocks ([Q1]).
- ONGC's arbitral award: ONGC is seeking to enforce a 2023 arbitral award of about US$37 million against the company and its subsidiaries, "which has already been provided for in the books".
Moat and margin
Focus moat: cornered resource. An upstream oil company owns no oil. It owns the right to produce from specific blocks, for a fixed term. Cambay shows how that right ends: when the government declines an extension, the operator hands over the field, whatever it has invested. The same logic applies, at far larger scale, to Rajasthan, which is 83% of gross output this quarter (59.9 of 72.2 kboepd, our arithmetic). The documents we read do not say how long Rajasthan's contract runs.
The margin side has been helped by price. In Q1, the company realised US$102.5 a barrel of oil equivalent, against US$69.7 a year earlier ([Q1]). Falling volumes at a better price kept Q1 revenue up 9%.
MoatSCORE: not yet scored. Vedanta Oil & Gas is not on the Moat Screener ([MS]).
The bear case
- Volume decline. Gross output fell 19% in a year, two-thirds of it from Rajasthan's natural decline.
- Contract risk. Cambay and four OALP blocks have already been lost or not extended.
- Disputes. The DGH damages, ONGC's award and the Cambay appeal are all open.
The case for
- Price. Q1 realisations rose 47% from a year earlier.
- Recovery work. Optimisation helped Ravva, which grew 16% from the June quarter.
- Provisions taken. The Cambay impairment and the ONGC award are already provided for, per the company.
What to watch
- The Division Bench ruling on Cambay.
- Rajasthan output in Q3, and any disclosure of the block's contract term.
- The amount DGH seeks on the four OALP blocks.
- Q2 results: the size of any further Cambay charge.
Sources
- [PR] Vedanta Oil & Gas, Q2 FY27 production release, 3 Oct 2026 (NSE)
- [HC] Vedanta Oil & Gas, disclosure on the Delhi High Court judgment, 22 Jul 2026 (NSE)
- [Q1] Vedanta Oil & Gas, Q1 FY27 results press release and presentation, 29 Jul 2026 (NSE)
- [DGH] Vedanta Oil & Gas, disclosure on DGH demands, 21 Jul 2026 (NSE)
- [ONGC] Vedanta Oil & Gas, disclosure on ONGC's enforcement petition, 21 Jul 2026 (NSE)
- [MS] Moat & Margin, Moat Screener and How MoatSCORE works
Educational research, not investment advice. Every figure above is drawn from Vedanta Oil & Gas's own filings, read from the primary documents on 4 October 2026; derived figures are our arithmetic and are labelled. Vedanta Oil & Gas is not yet scored on the Moat Screener. No buy/sell recommendations, no price targets, no share prices. Moat & Margin is not a SEBI-registered Research Analyst or Investment Adviser.
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