Andhra to take stake in GSPCL

State govt's stake in Gujarat State Petroleum Corporation to be nominal, say sources

The Andhra Pradesh government has decided to take a stake in the Rs 500-crore Gujarat State Petroleum Corporation (GSPCL), which was earlier awarded the KG-OSN-2001/3 exploration block on the shelf part of Krishna-Godavari basin under the third round of the New Exploration Licensing Policy (Nelp-III).

However, government sources refused to specify the exact percentage of equity that the state government planned to hold in the Gujarat state public sector company. "Our equity participation would be nominal," was all that they could say.

GSPCL is going to be one of the important players alongside ONGC, Reliance in the ongoing oil and gas exploration activities in the K-G Basin off the Andhra coast, in the Bay of Bengal.

Based on the geo-scientific interpretation of available data, the block KG-OSN-2001/3 is one of the most prospective blocks in the region and thus, the probability of success of the block is very high. The success of surrounding blocks of Cairn Energy (Ravva) and Reliance, further ascertains the presence of prolific hydrocarbon reserves in this block, experts say.

The state government's decision is viewed as part of its efforts to have a say on the gas that would be evacuated from K-G basin via Andhra Pradesh.

The government wants all the players in the K-G Basin including Reliance and GSPCL to meet the needs of Andhra Pradesh before transporting it to other parts of the country. The government is also keen to get the share of gas resources exploited in the K-G Basin at cheaper rates for the state's needs.

Even though the state has no direct say over the gas finds, it is the state government that has to grant ground permission to lay pipelines for the evacuation of gas from the sea to these companies.

The government is also understood to leverage this power to have a say over the future gas supplies from the K-G Basin.

Towards this direction, the state government has recently constituted a cabinet sub-committee to look into the issues pertaining to the gas supply including the present and future needs of various sectors in Andhra Pradesh.

"Once this exercise is completed, the sub-committee will begin negotiations with these companies on the quantum of supply, the prices besides the setting up of a gas grid to cover the entire state," highly placed sources told Business Standard.

It may be recalled that the state government has already urged the Reliance group to allocate their future gas from KB Bain fields to the state on priority basis besides inviting the group to set up gas-based power projects with a capacity of 2,000 mw to 3,000 mw near Kakinada.

The Andhra government is considering the gas resources as a key asset for the industrialisation of the state and also to supply power at cheaper rates.