Follow us on Google News
State-run Oil and Natural Gas Corporation (ONGC) has taken over the operations and control of the Cambay offshore block CB-OS-02 in Gujarat from Vedanta Oil and Gas Limited. The handover came into effect on July 22, 2026, following a ruling by a single-judge bench of the Delhi High Court. In the wake of this development, the Vedanta group recorded an impairment charge of approximately ₹379 crore after reassessing the value of assets and receivables associated with the block. However, the legal battle between the two companies over the asset remains unresolved, as a division bench of the Delhi High Court has concluded hearings on Vedanta’s appeal and reserved its judgment. According to regulatory filings by both ONGC and Vedanta, the Cambay block was previously operated by Vedanta with a 40 percent participating interest, while ONGC held 50 percent and Invenire Petrodyne Limited held the remaining 10 percent. Through a letter issued on September 19, 2025, the government rejected a request to extend the Production Sharing Contract (PSC) and directed that operatorship of the block be transferred to ONGC.
Dispute Over Contract Extension
The Production Sharing Contract for the Cambay block expired on June 29, 2023. Vedanta and its joint venture partners had applied for an extension on June 28, 2021, under the government’s 2017 contract extension policy, but the authorities declined to grant approval. Vedanta subsequently challenged the government’s decision before the Delhi High Court on September 22, 2025. During the initial proceedings, the court granted an interim order maintaining the status quo, which temporarily prevented the transfer of control. However, on July 22, 2026, the single-judge bench dismissed Vedanta’s petition and vacated the interim stay, enabling ONGC to assume operational control of the offshore block.
ONGC Assumes Control and Seeks Petroleum Lease
ONGC stated in its regulatory filing that it accounted for its interest in the block as an unincorporated joint venture until July 21, 2026. Beginning July 22, the state-owned explorer commenced operating the block under the terms applicable to the government nomination regime and formally applied for a petroleum lease on July 28. Confirming that physical possession and operations rest with it, ONGC also clarified the financial liabilities related to decommissioning and future production activities. Expenses for removing old facilities and restoring the site will be met from the Site Restoration Fund established for the block, while ONGC will bear all other liabilities arising from petroleum operations after July 22, 2026, for as long as it continues to operate the asset.
Vedanta Books ₹379 Crore Impairment Charge
Following the July 22 court order, Vedanta Oil and Gas Limited stopped recognizing revenue and expenses from the Cambay block in its financial accounts. The company stated that the absence of a valid Production Sharing Contract and uncertainty over the recoverability of assets and receivables prompted a reassessment of carrying values. Consequently, Vedanta booked an impairment charge of around ₹379 crore in the first quarter of financial year 2026-27, reflecting a potential decline in the value of block-related assets and outstanding dues, which weighed on its quarterly earnings. Meanwhile, Vedanta has challenged the single-judge ruling before a division bench of the Delhi High Court. According to company filings, arguments on the appeal concluded on October 1, 2026, and the bench has reserved its verdict. Both companies noted that the final legal outcome and its potential financial impact cannot be ascertained at this stage, leaving the future of the Cambay block’s operatorship dependent on the division bench’s forthcoming decision.
