'We didn't have deep pockets to go ahead with K-G basin discovery'

Interview with Managing Director of GSPC, J N Singh

With state-owned Oil and Natural Gas Corporations (ONGC) board approving the acquisition of 80 per cent stake in debt-laden Gujarat State Petroleum Corporation’s (GSPC) Deen Dayal West field in the Krishna-Godavari (K-G) basin gas block for $995 million (Rs 6,700 crore), the latter has overcome a major hurdle in its exploration plans. The deal helps GSPC in retiring part of its Rs 20,000 crore debt, shift focus to more profitable businesses. Managing Director J N SINGH talks to Vinay Umarji about the road ahead for GSPC from here. Edited excerpts:

What is the extent of the deal with ONGC?

This deal is for the K-G Basin’s DDW block, where we are selling our 80 per cent stake to ONGC. For the remaining discoveries, they have given us around $200 million advance. As and when more discoveries will happen, the same will be discussed with them; ONGC will be running these discoveries. They will be compensating us for whatever emerges from those other discoveries. 

 

How much of debt will you retire after this deal?

We’ll talk to banks and other institutions. Obviously, the entire debt cannot be retired.

DDW is your marquee in upstream business. What does this mean for GSPC in the upstream segment?

It is marquee as far as the K-G basin is concerned. It is where we are withdrawing. Our onshore discoveries are still there. It is just that we didn’t have that deep pocket to go ahead with development and exploration in the K-G basin. It is, therefore, in the national interest that we’re going ahead with ONGC, best suited to take such exploration and development work.  We’re now not going to invest so much into only one discovery. GSPC continues to be in the upstream business and we’ll continue to look for better opportunities. 

You had relinquished abroad blocks in the past. Any plans to return there? Do you plan to bid for blocks in future?

We are relinquishing only such assets which are not turning profitable to us. We are looking at assets closely and will focus where we have strength. 

How do you look at your other business segments such as gas trading, gas transmission and city gas distribution? 

We are one of the strongest in city gas distribution. We are also one of the biggest in gas transmission other than GAIL. Exploration, on the other hand, requires deep pockets. In exploration, we found a partner who, in the national interest, can do a better job than us. We’ll 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 these? 

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.