Gujarat plans exclusive petro SEZ

In what could be the first Special Economic Zone of its kind, the state government on Monday announced setting up of an SEZ exclusively meant for the petroleum sector.

The new SEZ has been conceptualised in view of the unprecedented growth in hydrocarbon sector as several multinational conglomerates as well as public and private companies are setting up activity base in the state.

The SEZ is expected to come up in Kutch district and the state government is chalking out a plan to develop the SEZ with the public-private participation.

"Multinationals and global players in the oil and gas sector skip India because of the heavy duty levied by the government to bring in equipment for exploration of oil and gas in the country. The state has decided to set up a special economic zone (SEZ) for the petroleum sector, in order to attract the multinationals and mega players to make their base headquarters in Gujarat," chief minister, Narendra Modi, announced in Dholka on Monday.

The proposed SEZ would be go a long way in making Gujarat the petro capital of India and would attract the international oil and gas majors to set up their base in the state," said Modi.

Gujarat currently produces 8.5 million metric tonne (MMT) of oil per annum and 17 million metric standard cubic metres per second (MMSCMD) of gas and has the potential of increasing the oil and gas production by three to four times. As of today, only 3,000 wells have been drilled in the last 45 years and this has only produced half of the in place hydrocarbon resource.

The other half remains to be exploited and going by the past record it involves drilling of 75 wells a year and this translates to Rs 750 crore. However, considering the recent discovery in Rajasthan which is set to produce 5 million tonne per annum, Gujarat will have to support the various sector of E&P to the tune Rs 1,500 crore per annum.

Gujarat is base for several E&P companies such as ONGC, Reliance, Essar, British Gas, Cairn Energy, Niko Resources, Joshi Technology, Interlink Petroleum, Selan Exploration, Phoenix, Geo Global Resources, Heramec, HOEC, Jubilant Enpro and the like.

The requirements of these E&P companies are serviced totally from Middle East and that too probably serviced mostly by Indian manpower based out of Jabel Ali Free Trade Zone.

Some benefits that Gujarat expects to derive out of the move are to provide easy resource for best exploitation of natural resources in Gujarat and develop an industry hub for the western region and develop a base which can service the oil rich middle east region.

However, the government will have to identify at least 300 acres of well connected open land for a oil and gas industry specific free trade zone and Kutch appears to be best suited for this. A special purpose vehicle with a mandate to develop the Free Trade Zone.

In the upstream sector, the activities in the state are augmented by the presence of multinational companies like Crain Energy, British Gas, Niko Resources, Geo-Global Resources, Heramac and JTI, apart from the Indian companies such as ONGC, Selan, Jeo-Enpro Limited, HOEC, GSPC and Interlink amongst others.

The government has issued exploration licence to 10 companies, which includes HOEC, L&T-JTI, Interlink Petroleum Ltd, ONGC, SELAN, GSPC, Niko Resources Limited, Jubliant Enpro, Heramac, and Hydrocarbon Resources Development.