GAIL open to overseas E&P tie-ups

GAIL India has sought a bigger role in gas exploration and production (E&P) business within the country and abroad even as the Centre has disapproved the idea of floating a separate subsidiary on the lines of ONGC Videsh Ltd (OVL).

The company is keen on seizing any 'farm-in' opportunities that come on its way. Moreover, the company is also eager to work with OVL in overseas gas blocks.

By this way, it could avoid competing with any other state-run companies in foreign markets. It can be mentioned that such competition for foreign oil or gas equity in an exploration or production block has recently been touted as one of the driver for merger of oil companies.

Proshanto Banerjee, chairman and managing director, said: "We keep getting 'farm-in' offers from multinationals which are willing to offload part of their stake in some particular block. GAIL is eager to look at those opportunities if there is a good deal."

Apart from that the company is willing to jointly work with OVL with clearly separated roles. "While OVL could work in exploration and production, GAIL could be involved in downstream evacuation of the gas," Banerjee added.

Such defined roles could avoid any clash of interest among oil companies where both will work on core competence. In a way, OVL will also retain right when there is competitive bidding through global tender for exploration and production blocks.

However, there is yet to be any clear cut policy from the Centre on this issue. State-owned majors such as Indian Oil Corporation (IOC) and GAIL had earlier sought government nod for floating their own overseas companies in the same fashion as OVL. Alternatively, they had also asked for a pie in OVL. ONGC strongly objected to this idea and the deliberation remained inconclusive then.

GAIL has participating interest in eight offshore blocks and four onshore blocks. They include two farm-in block in India and Myanmar. In the Myanmar offshore A-1 block, GAIL has 10 per cent interest, while OVL has 20 per cent.