Vedanta makes bold oil push with 7 new blocks—what it means for its stock and India’s energy future

Why is Vedanta expanding oil exploration on India’s West Coast?

Cairn Oil & Gas, the upstream arm of Vedanta Limited and India’s largest private-sector oil producer, has added seven new blocks to its portfolio through the Open Acreage Licensing Policy (OALP) Round IX. With this expansion, Cairn now holds 69 oil and gas blocks covering approximately 73,000 square kilometres, reinforcing Vedanta’s ambition to dominate India’s domestic hydrocarbon sector and significantly increase its contribution to national oil output.

The newly awarded assets include four onshore and three shallow water blocks spread across the prolific Cambay, Saurashtra, and Mumbai basins. These basins have historically yielded significant reserves, and their development aligns with India’s strategic energy goals. With Cairn now holding 100% participatory interest in all its OALP blocks, Vedanta is poised for streamlined decision-making and capital deployment across exploration and production phases.

This development further supports the company’s vision of producing 50% of India’s domestic crude—a target repeatedly articulated by Vedanta leadership. The expansion is not only a strategic business play but also a response to India’s increasing focus on energy security and self-sufficiency.

How does this move align with Vedanta’s broader upstream strategy?

Cairn Oil & Gas has consistently leveraged the OALP regime to scale its exploration footprint. The company was a major player in earlier licensing rounds, having secured 36 blocks in Round I, 5 in Round II, and 3 in Round III. The addition of 7 new blocks in Round IX continues that aggressive trajectory.

Cairn’s legacy assets from the New Exploration Licensing Policy (NELP) and pre-NELP days, combined with the new OALP wins, create a diverse and geographically balanced upstream portfolio. The company’s ongoing operations in Rajasthan, Gujarat, Andhra Pradesh, and Assam already account for nearly a quarter of India’s total crude production.

In the West Coast region specifically, Cairn currently operates the Lakshmi and Gauri offshore fields in the Cambay Basin (CB/OS-2 block) near Surat, along with the Jaya onshore field in Bharuch, Gujarat. Plans are also underway for an appraisal and development campaign at the Ambe shallow water block in the Gulf of Cambay.

These developments point to an integrated strategy combining new exploration with quick development cycles, targeting shallow water and onshore reserves that can be monetised rapidly due to existing infrastructure and proximity to major refining hubs.

What does this signify for Indian energy policy and upstream reforms?

India’s OALP framework has been designed to liberalise the upstream sector by enabling companies to propose blocks of their choosing for auction, eliminating red tape and allowing quicker access to untapped reserves. The policy has been hailed as a landmark shift from the earlier NELP model, which was marked by bureaucratic delays and restrictive fiscal terms.

Vedanta’s continued participation and success in OALP rounds reflect a strong endorsement of these reforms. In a statement accompanying the announcement, Vedanta Group Chairman Anil Agarwal lauded India’s hydrocarbons policy as the “most attractive in the world,” citing investor-friendly terms and robust returns on capital as core advantages.

This wave of interest from domestic firms like Vedanta complements the Indian government’s broader efforts to increase domestic oil and gas production, which currently falls short of demand by a wide margin. With over 85% of crude oil requirements being met through imports, the role of private players in strengthening domestic production is increasingly vital.

What technologies and approaches will Cairn use to maximise value from these new blocks?

Vedanta is known for its data-driven, high-efficiency exploration techniques, employing a range of conventional and unconventional recovery methods. These include tight oil and gas extraction, deep and shallow water offshore production, enhanced oil recovery using Alkali-Surfactant-Polymer (ASP) techniques, and Coal Bed Methane (CBM) development.

Cairn has previously demonstrated fast-track development capabilities in Rajasthan’s Barmer Basin, transforming it into one of the country’s most productive onshore oil regions. The same approach—combining agile project management, advanced geophysical modelling, and efficient drilling—is expected to be applied to the new West Coast assets.

The focus will also be on de-risking the newly acquired acreage using reprocessed seismic data and leveraging existing infrastructure to reduce development time and capital expenditure. Given Vedanta’s commitment to achieving Net Zero emissions by 2030, these projects are expected to be aligned with global ESG best practices from inception.

How does this strategy align with Vedanta’s sustainability and ESG commitments?

While ramping up hydrocarbon production may appear counterintuitive to ESG goals, Vedanta is positioning itself at the intersection of energy security and sustainability. Cairn is India’s first oil company to sign the United Nations Environment Programme’s OGMP 2.0 methane reporting initiative, which focuses on accurate methane emissions tracking and reduction.

At the corporate level, Vedanta has pledged to invest $5 billion over 10 years to meet its net-zero ambitions. Its ESG framework emphasises water conservation, emissions reduction, biodiversity protection, and community impact. The company has also ranked among the top performers in the S&P Global Corporate Sustainability Assessment and is listed on the Dow Jones Sustainability World Index.

These initiatives are intended to reassure investors that Vedanta’s oil and gas expansion will not come at the cost of long-term environmental integrity. It also reflects the company’s belief that responsible fossil fuel development still has a key role to play in India’s energy mix during the transition to renewables.

Stock sentiment: What does this development mean for Vedanta’s share price and investor outlook?

Vedanta Limited (BSE: 500295; NSE: VEDL) has seen moderate stock movement in recent sessions, with market sentiment currently skewed neutral-to-positive. As of mid-April 2025, the stock is trading in the range of ₹280–₹295 on the National Stock Exchange, rebounding from recent lows driven by broader market volatility and commodity price fluctuations.

The announcement of new block acquisitions under OALP Round IX is likely to improve sentiment in the medium term. Analysts view the development as supportive of long-term earnings potential, especially given Vedanta’s 100% ownership of the blocks, which maximises its share of any future production upside.

However, investors remain cautious due to lingering concerns over Vedanta’s debt profile, the parent company’s balance sheet stress, and global base metal pricing pressures. Moreover, macroeconomic headwinds such as elevated interest rates and subdued Chinese demand for commodities continue to weigh on resource-heavy stocks.

Buy-Hold-Sell Recommendation:

Currently, consensus among analysts leans toward a “Hold” rating on Vedanta Limited. While the expansion in upstream assets offers compelling long-term value, short-term risks linked to debt refinancing, dividend payouts, and broader sector headwinds warrant a measured approach.

For investors with a long-term horizon and higher risk appetite, Vedanta’s focus on oil and gas, alongside its diversification in zinc, aluminium, and steel, remains attractive. However, those seeking stability in the near term may prefer to wait for clearer signs of debt restructuring progress and upstream output gains from the new blocks.

What lies ahead for Vedanta and Cairn Oil & Gas?

Vedanta’s upstream pivot is gaining traction at a time when India’s domestic energy landscape is at a critical inflection point. The success of OALP Round IX solidifies Cairn’s position as a major contributor to national oil production and places the company at the forefront of India’s energy security drive.

The coming quarters will likely see increased drilling activity, seismic surveys, and early development work across the Cambay, Saurashtra, and Mumbai blocks. Cairn’s challenge will be to maintain capital discipline, meet its ESG milestones, and demonstrate reserve accretion that translates into commercial production.

For Vedanta shareholders, this development offers both strategic and financial visibility, albeit tempered by external risks. If executed efficiently, this expansion could mark the beginning of a new era in Vedanta’s energy ambitions—one that blends profitability with purpose.