Mumbai: Newly-listed Vedanta Oil and Gas Ltd (VOGL) expects to nearly double its oil and gas production over the next three years, with capital investment of $700 million (about ₹6,600 crore) lined up for the current financial year to boost output from ageing wells and support new exploration.
The company aims to produce more than 150,000 barrels of oil equivalent per day (boepd) by FY29, up from 87,000 barrels in FY26, according to an analyst who attended the demerged company’s first investor meet last week.
VOGL, which currently accounts for about a quarter of India’s oil output, aims to raise its share to 50%, the company said in its first investor presentation since the demerger of —the Anil Agarwal-led resources major with interests spanning aluminium, steel, crude oil and power generation—into five separately-listed companies, each focused on a single line of business.
The capex for FY27 is more than double the ₹3,100 crore investment made by the company in FY26.
However, the production plan hinges on several favourable outcomes aligning. The first is the successful deployment of alkaline-surfactant-polymer (ASP) flooding technology, where old oil fields are flooded with chemicals to improve recovery. The company has projected that ASP will increase oil recovery from 41% to over 60% in its largest oil field in North Rajasthan, based on results of a successful pilot project.
Similarly, the company expects to increase production through other techniques to enhance recovery from ageing assets and by finding new oil and gas through exploration.
At least one expert said that the company’s projections on increasing production from ASP were optimistic, while another analyst flagged execution risk in new exploration and asset development.
A turnaround in production trends is crucial for the newly-formed company. Its production has fallen year over year for more than a decade from 211,000 boepd in FY15 to just 87,200 boepd in FY26.
Shares of Vedanta Oil and Gas have lost nearly 8% on the BSE since their listing on 15 June. At 9:51 am on Tuesday, the scrip traded at ₹32.65 on the BSE, down 1.8%.
Ambitious growth plans
VOGL has reorganized its business into six operating units with a sharp focus on growing production, increasing oil and gas reserves, and cutting costs. The business units are Rajasthan North, which accounts for more than half of the company’s output, Rajasthan South, Coastal West, Coastal East, North East, and Deep Water, as per the company’s first investor presentation.
At the same time, it aims to reduce the cost of production to $10-13 per barrel from $16.5 currently. This is expected to lift its earnings before interest, tax, depreciation and amortization (Ebitda) to $961 million by FY29 from $492 million in FY26, analysts at PL Capital noted on 25 June.
In Rajasthan North, the company is betting on the ASP technology to boost recovery. It is also working on accessing tight oil—crude trapped in hard rock—to increase output. These measures are expected to halt the field’s production decline and increase output to around 80,000 boepd by FY30 from around 55,000 boepd expected in FY27, as per the investor presentation.
However, Ajay Mandal, professor and former head of the petroleum engineering department at Indian Institute of Technology (ISM) Dhanbad, feels the recovery gains from ASP predicted by the company are optimistic.
“Based on my observations, however, the laboratory results appear somewhat optimistic, indicating a significantly high recovery potential,” he said. “Achieving a substantial incremental recovery beyond 40% (original oil in place) is generally challenging and warrants detailed technical validation.”
The field shows considerable potential for improvement in oil recovery through ASP flooding, he said. But results observed under laboratory conditions may not scale in the reservoir because of the heterogeneity, scale-up effects, chemical losses, reservoir uncertainties, and operational constraints, he said.
A Vedanta spokesperson declined to comment.
At its other five operating units, VOGL is looking to increase production through a combination of operationalizing new oil fields, tapping deep-seated gas, drilling new wells in existing reservoirs, and .
“Across all six business units, management outlined a unified strategy focused on increasing production, expanding reserves and reducing operating costs,” Harshraj Aggarwal, lead analyst at Yes Securities, noted in a report dated 24 June. “The combination of enhanced oil recovery, deep gas developments, offshore discoveries and large-scale exploration programs provides multiple avenues for long-term value creation across the portfolio.”
However, he highlighted risks of sensitivity to , challenges in scaling ASP results from the pilot project to the reservoir, and exploration uncertainty.
“A significant portion of the company’s long-term growth outlook is dependent on successful exploration and commercialization of opportunities across Deepwater KG Basin, Rajasthan Deep Gas, Coastal assets and North-East India. Delays in appraisal, development execution or lower-than-expected resource conversion could impact future production growth,” he noted.
VOGL has a market capitalization of ₹13,002 crore, the second-lowest among the five companies formed from demerging Vedanta Ltd. The other companies are Vedanta Ltd ( ₹1,11,055 crore), Vedanta Aluminium Metal Ltd ( ₹1,76,828 crore), Vedanta Power Ltd ( ₹16,189 crore), and Vedanta Iron and Steel Ltd ( ₹16,189 crore).