 "ONGC")
In a strong rebuttal to allegations of scam in sale of KG gas field, the Gujarat government has said there is no "underhand" dealing as the field is being transfered from one PSU to another, and the country's asset continues to be with the public sector.
Gujarat State Petroleum Corp (GSPC) had originally considered selling the Deen Dayal gas fields in Bay of Bengal to BG Group of UK but last month, stuck a deal to sell them to state-owned Oil and Natural Gas Corp (ONGC) for USD 1.2 billion.
In an interview to PTI, Gujarat Chief Secretary and GSPC MD J N Singh said, the fields in KG basin, off the Andhra coast, were at "some particular point" seen as "very very promising gas site in the country."
But "we reached a particular point... We did not have enough financial strength to go forward with it beyond a point. And then, we started looking for some strategic partners or others who along with us could do it.
"There was initially British Gas and some others in the discussion, ultimately by consensus, it was felt it is much better if it is done with a PSU and an Indian PSU," he said.
ONGC, he said, is technically and financially much more sound and it also has the advantage of having gas fields at adjacent block in KG basin.
Asked about Congress MP Jairam Ramesh's allegation of a Rs 8,000 crore scam in a Central PSU being used to bail out GSPC that was on verge of a loan default, he said, "It is a political thing. I don't want to respond to it."
"But it is a win-win situation if the country's assets continue to be with the PSU. (By transferring) from one PSU to another, there is no private dealing, no underhand dealing.. So, where is the question of conspiracy or judicial enquiry?" he asked.
Even if the gas fields, where GSPC has till now spent close to USD 3 billion, were to have been sold to British Gas "at a higher cost", it would "always (be) open to question".
(Now), it goes to ONGC. We are very happy," he said.
Ramesh, in an open letter to SEBI Chairman U K Sinha, had alleged that GSPC has been trying to recover gas from the KG basin block for more than a decade without much success despite massive borrowings of close to Rs 20,000 crore.
Alleging that ONGC had flouted listing guidelines and did not secure approval of minority shareholders for the transaction, he said the state-owned company "suddenly" after 2014, had a realisation that buying GSPC's gas block in KG basin is a virtue.
GSPC has spent large sums of money, hired foreign experts and imported sophisticated equipment and yet could not find gas. "Then, why does ONGC deem it fit to pay Rs 8,000 crore to acquire this very block?" he said demanding a probe into the deal.
ONGC is to pay USD 995.26 million for the three
discoveries in the KG-OSN-2001/3 block that are under trial production since August 2014.
Another USD 200 million will be paid as advance consideration of six other discoveries, for which GSPC has been finalising an investment plan for bringing them to production.
GSPC, which had a debt of Rs 19,716.27 crore as on March 31, 2015, has so far made 9 gas discoveries in the Bay of Bengal block. Of these, three - KG-08, KG-17, KG-15 - commonly known as Deendayal West (DDW) fields - have been approved for development.
But against an approved field development plan (FDP) cost of USD 2.75 billion, GSPC has seen a huge cost-overrun, incurring USD 2.83 billion as on March 31, 2015.
Additionally, it had incurred an exploration cost of USD 584.63 million, taking total expenditure as on March 31, 2015 to USD 3.41 billion.
The trial production from the DDW field commenced in August 4, 2014, but the average production achieved was only 19.45 million standard cubic feet per day, against a targeted commercial production of 200 mmscfd.
Commercial production has not commenced as production rate has not yet stabilised. The DGH approved FDP had envisaged commercial production from December 2011.
As per the approved FDP of DDW fields, the estimated oil and gas in place (OGIP) was 1.952 trillion cubic feet (tcf) with a projected cumulative production of 1.0596 tcf at a recovery rate of 54.3 per cent.
ONGC will buy GSPC's entire 80 per cent stake in the block. Jubilant and Geo Global Resources (GGR) own 10 per cent stake each in the block.
GSPC began trial production of a very small volume of gas from August 4, 2014 but has not yet reached commercial production.
