Modi's KG basin claim is all gas, alleges Dinsha

Is the biggest announcement by the Narendra Modi government all gas? Two years after the Gujarat chief minister announced discovery of India's biggest gas reserve, the Centre has said the find could be very small. What's more, commercial production of this gas could be difficult, it said.

Modi had announced with much fanfare that state-owned Gujarat State Petroleum Corporation Ltd (GSPC) had discovered India's biggest gas reserve of 20 TCF (trillion cubic feet) in the KG basin.

Now, Union Minister of State for Petroleum, Dinsha Patel, who is pitched against Modi in the Maninagar Assembly constituency, says the find may not be more than 1.3 TCF.

"It may not be more than 1.3 TCF. We have written to the GSPC saying that given the nature of the find, it is difficult to make it commercially viable," Patel told Business Standard.

GSPC website claims the block has an estimated reserve of 20 TCF, which makes it the country's largest gas reserve, valued at Rs 2 lakh crore according to the current prices.

It says the daily production is estimated to be 65-70 million metric standard cubic metres per day (mmscmd), which is equivalent to India's present gas production.

So far, GSPC has drilled seven wells in the block and tested five of them. The corporation will have to drill five additional wells to prove its claim, say industry sources.

GSPC Managing Director DJ Pandian declined comment on Patel's remarks and said he hadn't received any letter from him on the issue. The state-owned company claimed it would start commercial production from the well by December 2007.

However, commercial production from the KG basin block has been delayed due to technical difficulties. The KG-8 well, at over 5,000 metres, is one of the deepest offshore wells in India.

Confusion over the amount of gas in the well has been going on for some time now. The Directorate General of Hydrocarbons (DGH) has been saying there is much less gas in the block than GSPC originally claimed.

Last year, GSPC invited bids from international energy firms to sell 30 per cent stake in the find. As many as 11 companies expressed their interest, out of which the number of shortlisted companies is four "" BG Plc. of the UK, BP Plc., Chevron Corp. of the US and ENI Spa of Italy.