Delhi HC upholds Centre's decision to deny oil block extension to Vedanta

The Delhi High Court on Wednesday upheld the Centre's decision to not extend its Production Sharing Contract with Vedanta for an offshore oil block in Gujarat and hand over the operations to Oil and Natural Gas Corporation Ltd (ONGC).

Justice Purushaindra Kumar Kaurav dismissed a petition by Vedanta Ltd seeking to set aside the Ministry of Petroleum and Natural Gas's direction passed on September 19, 2025, which rejected its 2021 application to extend the Production Sharing Contract (PSC) dated June 20, 1998, for the Suvali oil block.

The petition also sought setting aside of the direction to ONGC to immediately take over the assets and operations of the petitioner over the PSC contract area.

The original term of the PSC -- between the Centre, the petitioner, ONGC and Invenire Petrodyne Ltd-- was for 25 years, i.e. from June 30, 1998 till June 29, 2023, and was extendable for a specified period under certain circumstances.

The petitioner was the designated operator under the PSC.

After five interim extensions, the last interim extension expired on September 29, 2024.

Vedanta, in June 2021, had sought an extension of 10 years, i.e. till June 29, 2033.

In the judgement, the court stated that the petitioner's act of "unilaterally deducting" the government's share to either "neutralize its liability under the Excise Duty" or to "maintain its economic benefits" was a valid ground to refuse relief under the extension policy.

"Ex facie the said unilateral deduction was not bona fide. The petitioner is handling public resources of the people of India. The scheme of the PSC is such as would require the private company to give the share of the government. This arrangement does, to a certain extent, put the private company in a dominant position as the reigns of the government share lie in its hands. It must, however, be extra-cautious while treading this course. The government cannot be held ransom to the whims of a private company, which as per its fancies, interpretations, wishful dreamy adjudications tramples upon the Union's share," the court said in the judgement.

"The decision of the MoPNG to reject the petitioner's application seeking the extension of the Production Sharing Contract does not deserve to be interfered with. The present petition, along with all pending applications, is dismissed," it ruled.

Vedanta had contended that although it did not have an indefeasible right to an extension, the 2025 order was passed in violation of the extension policy, based on irrelevant considerations and without due application of mind.

The Centre had argued that its decision was in public interest and in furtherance of its obligations under the 'Public Trust Doctrine'.

In January, the high court had passed an interim order on Vedanta's petition and asked the parties to maintain status quo.