Vedanta Limited awarded 41 exploration blocks in India pursuant to Open Acreage Licensing Policy
Deepthi | Myequity news | Date : 29-08-2018 14:00:00 IST
Vedanta Limited has been successfully awarded 41 exploration blocks in sedimentary basins throughout India (the "Blocks") pursuant to the Indian Open Acreage Licensing Policy ("OALP") at a total bid cost of US$551 million (the "Transaction"). 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 "Group"), the Company will enter into 41 revenue sharing contracts ("RSCs") with the GoI to effect the Transaction. Following the signing of the RSCs, a license 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.
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 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 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 US$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. It is expected that this capital expenditure will occur over a period of approximately three to four years.
Vedanta Limited would have to (in case of any commercial discoveries in any Block, and subject to the terms of the RSCs and applicable law) share a specified proportion of the net revenue from each Block with the GoI. Pursuant to the RSCs, the average (unweighted) revenue share for the Blocks shall be 33 per cent for the initial two years in the case of onshore Blocks, three years in the case of shallow water Blocks or five years in the case of deep and ultra deep water Blocks. Following these initial periods, the revenue share payable to the GoI shall vary depending on the amount of revenue received.About Vedanta Limited:
Vedanta Limited is a diversified natural resources company, whose business primarily involves producing oil & gas, zinc - lead - silver, copper, iron ore, aluminum and commercial power. The company has a presence across India, South Africa, Namibia, Australia and Ireland.Vedanta Limited is the Indian subsidiary of Vedanta Resources Plc, a London-listed company. Governance and Sustainable Development are at the core of Vedanta's strategy, with a strong focus on health, safety and environment and on enhancing the lives of local communities. The company is conferred with the Confederation of Indian Industry (CII) ‘Sustainable Plus Platinum label’, ranking among the top 10 most sustainable companies in India.