Introduction

Energy major Vedanta Ltd has filed a petition before the Delhi High Court challenging the central government’s decision to deny an extension of its production sharing contract (PSC) for the Cambay Basin oil and gas block (CB-OS/2). The block includes the Lakshmi and Gauri fields, which have been producing oil and gas for over two decades.

Background

The Cambay Basin block, located off the coast of Gujarat, is one of India’s significant hydrocarbon assets. Vedanta, which operates the block under a production sharing contract signed with the government, has been seeking an extension after the contract term ended earlier this year.
However, the Ministry of Petroleum and Natural Gas, through an order dated September 19, declined to renew Vedanta’s contract and instead directed ONGC to take interim operational control of the fields.

Key Developments

• Vedanta’s petition argues that the government’s refusal is “arbitrary and contrary” to the terms of the production sharing agreement.

• The company has requested the court to quash the government order and allow continued operations pending a final decision.

• The Attorney General of India, representing the Centre, has questioned the maintainability of Vedanta’s plea, suggesting that contractual disputes of this nature should not be adjudicated by the High Court.

• The matter has been listed for hearing on October 10, 2025.

Issues and Implications

The case raises important questions about:

1. Contractual Stability: Whether existing production sharing agreements provide sufficient protection to private operators against sudden policy reversals.

2. Investor Confidence: Frequent disputes between the government and private energy firms could deter investment in India’s oil and gas exploration sector.

3. Policy Discretion: The outcome may determine the extent of the government’s authority to deny extensions based on policy changes or strategic considerations.

Current Status

The Delhi High Court will next hear the case on October 10, where both sides are expected to make detailed submissions on the validity of the government’s decision and Vedanta’s contractual rights.

Conclusion

The Vedanta vs. Government of India dispute over the Cambay Basin block could become a landmark case for India’s energy sector, setting a precedent on how production contracts are interpreted and extended. The judgment will likely influence the future investment climate and the balance between state control and private enterprise in the country’s hydrocarbon industry.