As demerger nears, Vedanta races to shore up oil output

After spin-off, oil & gas unit will lose cushion of group's cash-rich aluminium, zinc businesses

- Dipali Banka & Nehal Chaliawala

Ahead of its upcoming demerger into five separately listed companies, Vedanta Ltd is in a race against time to shore up production levels at its oil and gas business that have declined in each of the past 10 years.

Higher production levels could bolster the business's financials, helping it fend for itself when it is housed in an independent company named Vedanta Oil & Gas Ltd.

Over the past decade, ageing oil blocks have more than halved production at Vedanta’s oil and gas vertical from 211 thousand barrels of oil equivalent per day (kboepd) in FY15 to 103.2 kboepd in FY25. During the first nine months of FY26, average output stood at 89.1 kboepd—below the 95-100 kboepd guidance given by the company at the beginning of the year.

Reliance Industries and Oil and Natural Gas Corp. Ltd (ONGC) also face production decline at ageing blocks. But the problem takes centre stage at Vedanta as the business is about to demerge into a standalone company and it will no longer have the comfort of being part of a conglomerate with cash-rich aluminium and zinc businesses.