Vedanta Ltd has won an arbitration against a demand for a higher payout from its Rajasthan oil and gas fields after disallowance of Rs 9,545 crore ($ 1.16 billion) in certain costs incurred, the company said.

The government sought its share from the oil and gas fields after it reallocated certain costs between the fields in the block and disallowed a portion of the cost incurred on laying a pipeline to evacuate oil.

According to the contract, companies are allowed to recover all costs incurred before splitting profit in a predetermined ratio with the government. If a certain portion of the cost is disallowed, it would result in higher profits and a resultant higher share of the government. Vedanta had challenged such a demand before an arbitration tribunal.

“The company has received an arbitration award dated August 23, 2023... upholding the contention of the company that additional profit petroleum, on account of Director General of Hydrocarbon (DGH) audit exceptions in relation to allocation of common development costs across Development Areas and certain other matters, is not payable as per terms of the Production Sharing Contract for Rajasthan Block,” it said.

It however did not give details of the arbitration award. “The company is in the process of reviewing the award in detail and evaluating its financial impact,” it said.