 "We didn't have the resources to go ahead with KG basin discovery: GSPC MD")
With the state-owned Oil and Natural Gas Corporation (ONGC) board approving the acquisition of an 80 per cent stake in debt-laden Gujarat State Petroleum Corporation's (GSPC's) Deen Dayal West (DDW) field in the Krishna-Godavari (KG) basin gas block for $995 million (roughly Rs 6,700 crore), the latter has overcome a major hurdle in its exploration plans. The deal not only helps GSPC in retiring part of its roughly Rs 20,000 crore debt but also shift its focus to more profitable businesses. In an interview with Vinay Umarji, the state-owned company's managing director J N SINGH talks about the road ahead for GSPC from hereon. Edited excerpts:
What is the extent of the deal with ONGC?
This deal is for KG Basin’s DDW block where we are selling our 80 per cent stake to ONGC. Besides, for the remaining discoveries, they have given us around $200 million in advance. As and when more discoveries will happen, the same will be discussed with them.
After the field development plan in the other discoveries, we don’t intend to operate the same. Instead, ONGC will be running these other discoveries. They will be compensating us for whatever emerges from those other discoveries.
How much of the debt do you plan to retire post this deal?
We will talk with banks and other institutions. We are considering various financial options. Obviously, the entire debt cannot be retired.
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The DDW field is your marquee in the upstream business. What does this deal mean now for GSPC in the upstream segment?
It is marquee as far as the KG basin is concerned. It is there where we are withdrawing. Our onshore discoveries are still there. It is just that we didn’t have that deep pockets required to go ahead with development and exploration in the KG basin. It is, therefore, in the national interest that we are going ahead with ONGC, which is best suited to take these kinds of exploration and development work.
Now, we are not going to invest so much into just one discovery. GSPC continues to be in the upstream business and we will continue to look for better opportunities and will go according to our potential.
You had relinquished overseas blocks in the past. Any plans to return there? Do you plan to bid for blocks in the future?
We are relinquishing only those assets which are not turning profitable for us. We are looking at assets closely and will focus on the ones where we have strength.
How would you now look at your other business segments, such as gas trading, gas transmission and city gas distribution?
We are one of the strongest players in city gas distribution in the country. Other than GAIL, We are also one of the biggest in terms of gas transmission. Those are the businesses where we are very strong.
Exploration, on the other hand, requires a very deep pocket and risk. In exploration, we found a partner who, in the national interest, can do a better job than us. We will look at our competitive strengths in a bigger way now and move accordingly.
Sun Oil is believed to be in talks with you for buying out the rest of the stake in your Hazira oil and gas field. Do you plan to divest the same? If yes, by when?
This is totally false. Sun Oil is not in talks with us, at least at my level. It is too early to say anything about divestment.