Vedanta Oil to invest $5 billion to boost output fivefold

Vedanta Oil and Gas Ltd. will invest $5 billion to expand production by more than five times, underscoring India’s push to curb reliance on energy imports.

The company aims to boost output to about 500,000 barrels of oil equivalent a day within five years, Vedanta Group said in a statement. Production from the company’s oil and gas fields, including its most productive assets in the western Indian state of Rajasthan, have declined to a daily average of just 87,200 barrels in the fiscal year ended March 31, from more than 210,000 barrels a decade earlier.

Vedanta’s trajectory reflects the broader challenges confronting India’s upstream industry, which is struggling to increase production from aging oil and gas fields. Exploration firms, including state-owned Oil and Natural Gas Corp., have struggled to bring enough large discoveries online to offset the decline. 

Vedanta Oil expects production to average about 100,000 barrels a day in the current fiscal year. The company aims to eventually account for more than half of India’s crude output by increasing recovery from mature reservoirs and starting production from new fields.

The group is embarking on its next phase of growth by producing more through better partnerships, Chairman Anil Agarwal told shareholders at its annual meeting on Tuesday, according to the statement. “Resource security has now become national security,” he added. 

Agarwal forayed into the oil and gas business after acquiring a controlling stake in Cairn India in 2011 and later merged it with flagship Vedanta Ltd., which split its businesses earlier this year into five separate listed companies. Four of these, including Vedanta Oil & Gas, started trading on stock exchanges in June.

(By Rakesh Sharma and Preeti Soni)