MUMBAI: Vedanta Ltd has been awarded 41 exploration blocks in sedimentary basins throughout India pursuant to the Indian Open Acreage Licensing Policy (OALP) at a total bid cost of $551 million ($1 is app. Rs70.50 as of today). The OALP is a government-led initiative organised by the Directorate General of Hydrocarbons of the Government of India (GoI). The 41 blocks awarded to the company comprise 33 onshore blocks and 8 offshore blocks. Subject to approval from the shareholders of Vedanta Resources plc (together with its subsidiaries), the company will enter into 41 revenue sharing contracts (RSCs) with the GoI to effect the transaction.
Following the signing of the RSCs, a licence permitting exploration, development and production operations of all types of hydrocarbons will be granted pursuant to the terms of the relevant RSC in relation to each Block, according to a company statement.
The exploration period shall consist of two phases: (i) the Initial Exploration Phase; and (ii) the Subsequent Exploration Phase. In total, the exploration period will be for a duration of six years for all Blocks, subject to any extension granted. The development and production period of each contract will be a maximum of 20 years from the date of grant of the petroleum mining lease following discovery of previously unknown deposits of hydrocarbons and approval of the relevant field development plan, subject to any extension granted.
The Vedanta Group believes that the transaction complements its existing strategy to focus on production growth. The OALP is the first major auction of hydrocarbon blocks to take place in India since 2010 and provides an opportunity for the Group to acquire new acreages from all available areas in the sedimentary basins of India.
The objective of licensing the Blocks is to acquire fresh seismic data and drill exploration wells to establish resources and reserves of oil and/or gas. The bid cost of $551 million represents the company’s total committed capital expenditure on the Blocks during the exploration phase and will be satisfied in cash using the Group’s existing cash resources.