Vedanta Oil Stock Surges 5% as Court Upholds Rs 99 Million Arbitration Award
Vedanta Oil and Gas shares climbed significantly on July 9 after the Delhi High Court rejected the Central government's objections regarding a foreign arbitral award favoring Vedanta Limited and Singapore-based Ravva Oil. This move relates to a dispute concerning the Ravva oil field production sharing contract.The stock saw trading lift, with Vedanta Oil and Gas shares trading 5.2% higher at Rs 38.39 apiece by noon on July 9. The court ruling provides regulatory clarity regarding the enforcement of the award.
Court Upholds $99 Million Arbitration Award
The dispute originated from a contract dating back to 2014, when the Centre issued a show-cause notice demanding compensation. Vedanta and Ravva Oil subsequently pursued arbitration. This process culminated in a final arbitral award in 2016.Before the Delhi High Court, the Central government contended that the awards contradicted India's public policy. The government alleged that the arbitral tribunal had rewritten the Production Sharing Contract (PSC). It claimed the tribunal reduced the government’s share of profit petroleum by $99 million.
The award has been previously upheld by courts in Malaysia, adding international validation to the claim against the government. The High Court's decision provides a significant boost to investor sentiment toward Vedanta Oil and Gas.
Production Updates Show Declining Output
While the legal victory provided an immediate stock lift, company operational updates present a contrasting picture regarding production efficiency. Vedanta Oil & Gas production data for the first quarter showed a notable decline in daily gross output.The company’s average daily gross production dropped 17% to 77.7 kboepd (thousand barrels of oil equivalent per day). This figure compares against 93.2 kboepd recorded in the same period one year prior.
Furthermore, total oil and gas volumes also declined by 17%. The output stood at 7.1 kboepd from 8.5 kboepd reported during the corresponding period of the previous financial year.
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