“The tenure of the RJ Block PSC has been extended for an additional period of 10 years with effect from 15th May, 2020,” the mining major said.
The block was originally allocated to Cairn before the ‘New Exploration and Licensing Policy’ or NELP rules were put in place, and the company’s right to have the lease extended was uncertain.
The company had approached the Delhi High Court in 2016, saying that it had plans to invest Rs 35,000 cr in the block after 2020, when the current contract expired.
Under Indian laws, petroleum is owned by the state, and companies like Cairn/Vedanta are considered contractors who are authorized to extract oil and gas for a particular amount of time.
They also enter into a production sharing contract with the government stipulating the shares of each party from the output.
The extension is likely to add 250 million barrels of oil equivalent to the company’s reserves.
The government had come up with a policy to grant extensions to pre-NELP production sharing contracts last year.