The corporation’s $1.5-billion initial public offer to gain from the regulator’s nod.
The Directorate General of Hydrocarbons (DGH) has approved Gujarat State Petroleum Corporation’s (GSPC) field development plan for 2 trillion cubic feet (tcf) for the KG-8 Deendayal-West field in the Krishna-Godavari Basin off the coast of Andhra Pradesh.
The formal announcement was made on Saturday by the Director General of Hydrocarbons V K Sibal in Gandhinagar, after his meeting with GSPC’s board of directors.
“Based on the development plan submitted by GSPC on the basis of exploration work and the geological model analysed by various agencies, we have approved approximately 2 tcf of reserves in KG-8 in Deendayal-West of K G Basin,” Sibal said.
The move is widely expected to pave the way for the company’s much-awaited public offer. GSPC had been aiming to hit the capital markets last year, but the economic slowdown put the company’s plans on the backburner.
“We are aiming to raise anywhere between $1 billion and $1.5 billion by the end of this financial year. The DGH nod for developing 2 tcf will allow us to carry on the necessary valuations for the company,” a senior government official said on condition of anonymity.
GSPC plans to invest $1.6 billion in the development of its offshore Deendayal-West field, so that it can produce about 10-12 million metric standard cubic metres a day (mmscmd) of gas by the end of 2011, company sources said.
The Deendayal gas field was discovered in June 2005 in the KG/OSN/2001/3 block and awarded to the GSPC consortium under the third round of New Exploration Licensing Policy. It covers an area of about 125 sq km. The discovery was made in the southern part of K-G block, which is divided into three fault blocks — DD-West, DD-North and DD-East.
“The present development plan proposes to develop DD-West, covering 24 sq km. The base case gas reserve in DD-West is estimated to be 3 tcf. The plan envisages a production of approximately 5.7-8.6 mmscmd of natural gas from 15 production wells located on an offshore well-head platform at the KG-8 discovery location,” GSPC Managing Director D J Pandian said.
The state-owned GSPC plans to spend approximately $1.6 billion over two years for the development of the Deendayal-West field.
“GSPC will tie up with many expert agencies which will help it in developing the high pressure-high temperature gas reservoir. The Krishna-Godavari blocks, spread across 1,850 sq km, will help in producing the required quantity of gas not only for Gujarat, but for the entire nation too,” Gujarat state Secretary (Energy & Petrochemicals) S Jagadeesan said.
So far, the state government-owned corporation has spent close to Rs 4,000 crore and plans to spend another Rs 8,000 crore for the development of the Deendayal gas field. When production commence, the field is expected to have a daily gas output of Rs 10 crore for a period of 30 years, according to a company official.
