Global petro majors vie for GSPC pie

Global petroleum exploration majors are vying to become operating partner in Gujarat State Petroleum Corporation's (GSPC) gas find in Krishna Godhavari (KG) basin.

The company is expected to announce the name of the partner in a couple of months.

US-major ExxonMobil, British companies including Shell, BP, BG, Petrobras of Brazil and Petronas of Malaysia are in the race to join hands with the state-run company. GSPC has 80 per cent stake in the KG basin block, renamed Deen Dayal block. GeoGlobal and Jubilant Enpro have 10 per cent share each.

DJ Pandian, managing director, GSPC, told Business Standard that the company was looking for a partner for the exploration and production but nothing was finalised. Recently, the company had appointed global consultant UBS to identify the right player for a tie-up.

"Technically its difficult to operate in KG basin. The temperature and pressure are high, thus the chances for explosion during drilling can not be ruled out. The cost of the exploration is the next problem. Drilling of a well itself cost over Rs 250 crore. If a global partner is coming in, financial crisis can be avoided," they added.

"Earlier, GSPC had announced that it struck gas reserves to the tune of 20 trillion cubic feet (tcf) valued at a whopping $ 50 billion in Deen Dayal block. The company is planning to drill fifth well here and the testing shows the presence of high volume of gas in this field," sources close to the development said.

The commercial production of gas from this field is likely to be delayed by 6-8 months. Earlier, the commercial production was scheduled to begin by the end of 2007.

In KG basin, Oil and Natural Gas Corporation (ONGC) had tied up with British Gas for upstream ventures in three blocks. Reliance Industries is considering to give a part stake to Chevron Corporation, RIL's partner in Reliance Petroleum (RPL).