ONGC takes over disputed Cambay offshore block from Vedanta after Delhi High Court ruling

State-owned Oil and Natural Gas Corporation (ONGC) has taken over the operations and control of the disputed Cambay offshore oil and gas block from Vedanta Oil & Gas Ltd following a Delhi High Court ruling. Vedanta, meanwhile, has recognised an impairment charge of approximately ₹379 crore against assets and receivables associated with the block.

The takeover of the CB-OS-02 block became effective on July 22, 2026, after a single-judge bench of the Delhi High Court dismissed Vedanta's petition challenging the government's decision not to extend the production-sharing contract (PSC), according to regulatory filings by both companies.

The legal dispute is, however, not over, as Vedanta has appealed against the order before a division bench of the High Court.

Government declined to extend production-sharing contract

The Cambay offshore block was operated by Vedanta, which held a 40% participating interest. ONGC owned a 50% stake, while Invenire Petrodyne Ltd held the remaining 10%.

The production-sharing contract for the block expired on June 29, 2023. Vedanta and its joint venture partners had submitted an application for an extension on June 28, 2021, under the government's 2017 policy for extending production-sharing contracts.

However, the government, through a letter dated September 19, 2025, declined to extend the contract and directed Vedanta to hand over the block to ONGC.

Vedanta challenged the government's decision before the Delhi High Court on September 22, 2025, seeking relief against the proposed takeover.

ONGC assumes operational control

In its quarterly filing, ONGC said the High Court dismissed Vedanta's writ petition on July 22, 2026, leading to the vacation of an earlier interim stay that had directed the parties to maintain the status quo.

Following the dismissal, ONGC took over the block and subsequently applied for a petroleum lease on July 28, 2026.

The state-run explorer said it had accounted for its interest in the block as an unincorporated joint venture until July 21, 2026. Since taking over operations on July 22, it has been operating the block under the terms applicable to the nomination regime.

ONGC also clarified that decommissioning liabilities would be met through the site restoration fund maintained for the block. Any other future liabilities arising from petroleum operations after the takeover would be borne by ONGC for as long as it remains the operator.

"The company has taken over the custody of the block and accounted for its interest in the block as an unincorporated joint venture till July 21, 2026," ONGC said.

"The company, being a nominee of the government, is carrying out operations of the block CB-OS-02 applying the terms applicable for the nomination regime, since July 22, 2026."

Vedanta books ₹379 crore impairment

Vedanta Oil & Gas Ltd said it had stopped recognising revenue and related expenses from the Cambay block with effect from July 22, 2026, following the High Court's order.

The company recognised an impairment charge of approximately ₹379 crore in the first quarter of FY27, citing the absence of a valid production-sharing contract and uncertainty surrounding the recoverability of assets and receivables associated with the block.

"Considering the recent judicial developments, the absence of a valid PSC and the resulting uncertainty regarding recoverability of assets and receivables relating to the block, the Group reassessed the carrying value of the related balances. Accordingly, the Group has recognised an impairment charge of approximately ₹379 crore during Q1FY27," Vedanta said.

According to regulatory disclosures by both companies, hearings in the appeal have concluded and the judgment has been reserved.