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State gas utility GAIL (India) Ltd interested in picking up equity stake in Gujarat State Petroleum Corp's (GSPC) Deen Dayal Block in the Krishna Godavari basin
State gas utility GAIL (India) Ltd interested in picking up equity stake in Gujarat State Petroleum Corp's (GSPC) Deen Dayal Block in the Krishna Godavari basin.
"We are willing to participate in the block as an equity partner and will talk to GSPC once they have certified their gas reserves," GAIL Chairman and Managing Director Proshanto Banerjee said.
GSPC recently announced a major oil and gas find in Deen Dayal Oilfield in KG basin, offshore Kakinada in east Godavari district of Andhra Pradesh.
The new find is at 3,500 metre depth and from a crater which is spread in 60 to 90 square km area.
According to sources, gas and oil finds in the second well of block KG-17 is expected to be larger than the Reliance gas finds of 2002, if the first well discovery of 2005 is taken into account.
The first well of the Deen Dayal Oilfield was drilled last year, which has estimated gas reserves of around 20 tcf.
Asked about the size of equity that GAIL is looking to acquire, Banerjee said, "We will decide about it once GSPC has ascertained its estimates. We are open about the size of the stake."
Banerjee said GAIL is also willing to buy and market the entire supplies as the Government nominee.
"We are open to any arrangement for evacuation of the product, which also involves buying the product," he said.
Gujarat Chief Minister Narendra Modi while announcing the discovery had refused to confirm any number about the recoverable reserves from the new gas find.
"GSPC has informed DGH about the discovery and its being assessed by DGH office," the Gujarat Chief Minister said.
GSPC has said it plans to raise money to develop gas fields in the Deen Dayal block through an initial public offering and also by selling part of its 80 per cent interest in the block to an industry partner.
To bring gas from the East Coast to the West Coast, GSPC has proposed to set up 3,000 km pipeline up to Ahmedabad.
However, the company has not announced the kind of investment that would go into the pipeline project.
"The pipeline will require huge investment so we may also explore possibility of some tie-up with some existing players", GSPC company said.
Global oil companies including BP Plc, the BG Group, France's Total SA and Brazil's Petrobras have expressed interest in investing in Deen Dayal, India's biggest gas discovery.
Indian Oil Corp Ltd (IOC) (BSE:530965) may also be interested in participating in the Block.
GSPC succeeded in exploring gas bulk at the rate of 4.8 million standard cubic feet per day and oil bulk of 862 barrels per day from the new well.
The gas available from KG 17 well is much superior with higher C2 and C3 propane and Ethane upto 17 per cent and 80 per cent methane.
With rich gas available, GSPC plans to have LPG separation plant either in Gujarat or in Andhra Pradesh.
The stock of high grade oil with light density from the well has raised hope for more oil as the new layer is located at lower depth of 3,500 metre which would reduce the cost of oil and gas production for GSPC and its partners in KG basin.
The State-run gas utility company is also planning to set up underground gas storage facilities, both for strategic and commercial reasons.
Talking about the plans, Banerjee said, "Various options were under consideration, including the conversion of depleted gas fields for storage." "We are in the process of appointing a consultant to do the feasibility study, which will take three-four months time,'' he said.
The idea of an underground gas storage facility was floated last year.
GAIL had even appointed French consultants Gaz de France (GDF) to assist them in the project.
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