Gujarat govt seeks 20% in $50 bn GSPC gas field

The Gujarat government has proposed to pick up a 20 per cent stake in the gas discovery made by Gujarat State Petroleum Corporation in the Krishna-Godavri basin.

The 20 trillion cubic feet gas discovery made by GSPC in June 2005 is considered to be worth over $50 billion at today's international gas prices. Thus, the Gujarat government's 10 per cent interest could be valued at $10 billion.

GSPC is a public sector undertaking owned by the Gujarat government. "The state government is not happy with just dividend cheques and is willing to become a business partner in the KG basin gas business," government sources said.

When contacted by Business Standard, Minister of State for Energy Saurabh Patel said, "No official proposal has been moved so far by the government."

However, he said the discovery was worth billions and the government could not ignore its importance. GSPC has an 80 per cent interest in the KG basin block and the remaining 20 per cent interest is shared by Jubilant Enpro and Geoglobal. GSPC is the operator in the block.

Even as the Gujarat government is eyeing a 20 per cent stake in the block, GSPC, which discovered gas in the KG basin in the middle of last year, has offered a 20 per cent stake to a leading oil major against the development of the field. If both the deals happen, GSPC's stake could come down from the current 80 per cent to 40 per cent.

Several leading oil companies have expressed interest in the development of the KG basin gas field. The list includes Shell, ExxonMobil, British Petroleum, British Gas, ENI of Italy, Total of France and Anadarko.

Many among these have already visited GSPC and explored possibility of gas production from the GSPC owned field.

However, industry analysts said that it would be interesting to see how the global oil majors react to this proposal of the state government.

GSPC had bid for the block in NELP-III and won the block against stiff competition from Reliance Industries and ONGC.

It started drilling operations with the first well KG-1 on 31 July, 2004. The gas reserve was detected while drilling the third well in the KG-OSN-2001/3 exploration block, located 6 km from the shore off Andhra Pradesh's Yanam-Kakinada coast.

The gas was discovered in early 2005 and was announced in June 2005 by Gujarat Chief Minister Narendra Modi.