Gujarat Petro bids for oil blocks overseas

Gujarat State Petroleum Corporation (GSPC) has become the first state level PSU in the country to go overseas for oil and gas exploration.

GSPC has bid for two blocks in western Australia along with Oilex of Australia, GAIL and Prize Petroleum- HPCL joint venture.

Both the blocks are located in gas and oil rich North West Shelf region of western Australia. The bid is also a first step towards launch of overseas investment arm by GSPC.The overseas investment arm under consideration would be something similar to that of ONGC Videsh.

When contacted, D J Pandian, MD, GSPC, told Business Standard, "The bid submitted late last month was the first attempt by the company to explore hydrocarbon opportunities outside India."

The bid has been made by GSPC as part of the consortium. Oilex Australia would be the operator of the blocks if selected by the Australian government.

Both the blocks are highly prospective and there is tremendous potential for gas from the block, said Pandian. The joint venture will explore the possibility of converting gas into Liquefied Natural Gas and than transport it to the clients all over the world.

The North West Shelf has over 40 trillion cubic feet of proven reserves of gas as Australia has two of its largest liquefaction projects Gorgon and North West Shelf are located in the western part of the country.

Since the liquefaction facilities are available right next door, GSPC joint venture can supply its gas to one of the two projects and convert it into LNG.

GSPC is also looking at the possibilities in the Middle East region. Pandian said GAPC is exploring potential in Oman, Qatar and Syria as many new blocks are going to be on offer soon. For GSPC second round of bidding would start from January next year when Syria and Oman are expected to offer some of its blocks.

The Gujarat state owned PSU is hopeful to have its own overseas investment arm by the time it enter the second round of bidding.In most likelihood next time GSPC will bid through its own overseas investment arm, said GSPC official.

Pandian said GSPC is all set to go for its own overseas investment arm- something on line with ONGC's ONGC Videsh Limited. GSPC is expected to go on its own for the overseas exploration and production subsidiary. The idea of foreign investment arm was initially mooted as joint venture with other oil or gas major from the public sector but now it seems GSPC is all set to go for its own subsidiary for overseas investment.

Once GSPC has its own subsidiary for hydrocarbon exploration and production it may even prefer to bid on its own in certain new round of international bidding instead of going for joint venture.

Over the past six years, GSPC has grown from operating small fields in Gujarat, into a major national oil and gas explorer and producer with over 22 oil and gas sites.

GSPC has discovered 20 trillion cubic feet of gas, worth £27bn ($50bn), four miles off the Andhra Pradesh coast in the south-east of the country.It was negotiating with various energy major for an exploration and production joint venture.