Vedanta Ltd. has approved a capex investment of $270 million across fields in Rajasthan in its board meeting on Tuesday. The decision was made as a strategic priority for its Cairn oil and gas business, which has seen declining production volumes at key reservoirs.
About The Investment
The investment aims to augment reserves of Cairn oil and gas and increase its near-term volume via infill wells, which are additional wells targeting pockets of oil left behind from the original development plan.
For this, the $270 million approved capex will be used for drilling wells and constructing a surface facility for ASP injection, which allows an increase in recovery in mature oil fields.
The project timeline for the same is 12 to 30 months and it will be funded.
Oil And Gas Segment
In FY24, Vedanta's oil and gas segment accounted for 12.5% of the company's consolidated revenues.
However, the segment's gross production has been continuously decreasing. The same trend was observed in the company's first quarter results, where gross production fell 17% year-on-year to 112 thousand barrels of oil equivalent per day. This compares to the 120 to 140 thousand barrels of oil equivalent per day volume guidance given by the company for FY25.
The major reason for the lower production was the natural volume decline in the key fields of Mangala, Bhagyam and Aishwariya, which the company has been offsetting by bringing in infill wells online.
In terms of operational expenses, the segment's opex stood 5% lower sequentially at $14.5 per barrel of oil equivalent in the first quarter of fiscal 2025. However, opex was 5% higher on an annual basis and higher than the FY25 opex guidance given by the company at $13–14 per barrel of oil equivalent.
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