Mumbai: Billionaire Dilip Shanghvi’s Sun Oil and Natural Gas is close to acquiring state-run Gujarat State Petroleum Corp.’s (GSPC) 66.67% stake in the Hazira gas field located in the Cambay basin in Gujarat, two people aware of the development said.
The deal is expected to close by September, the people said on condition of anonymity, without disclosing the deal value.
The purchase would give Sun Oil and Natural Gas full control of the gas field, in which it bought a 33.3% stake from Canada’s Niko Resources Ltd in December for an undisclosed sum.
Also in December, state-owned explorer Oil and Natural Gas Corp. Ltd (ONGC) said it had decided to purchase an 80% stake and development rights in GSPC’s Deen Dayal West field in the Krishna -Godavari offshore block OSN-2001/3 for $995.26 million.
The Hazira field is part of 16 hydrocarbon assets in Gujarat’s Cambay basin in which GSPC holds stakes. Niko has operated the field for the past 22 years.
Sun Oil and Natural Gas is a unit of Shanghvi’s Sun Petrochemicals Pvt. Ltd.
GSPC is 87% owned by the Gujarat government.
“With the Deen Dayal deal with Oil and Natural Gas Corp. done, GSPC is looking at monetizing other assets. GSPC is in talks with Sun Oil and Natural Gas to sell its entire stake in the field,” said one of the two persons cited earlier.
Sun Oil and Natural Gas declined to comment.
GSPC did not reply to an email sent on Monday.
Currently, the Hazira field produces 1,300-1,400 barrels of oil per day (bopd) and 7-9 million standard cubic feet of gas per day. Gas production began from the field in 1996 and oil production commenced in March 2006.
“The field has neared the end of its life and post September, GSPC may have to abandon the block. However, selling it to Sun Oil and Natural Gas would be a better way to monetize the field than abandoning it as abandoning a field costs nearly $30 million (to adhere to the safety norms of abandonment like dismantling the offshore platforms, maintenance of the pipelines etc),” added the first official mentioned above.
A banker aware of the deal said it would be a good purchase for Sun Oil and Natural Gas, which has studied the field and wants to explore it further unlike Niko and GSPC, which have other financial commitments.
“Sun Oil and Natural Gas’s technical advisers are confident of rich hydrocarbon deposits in the field, which Niko and GSPC do not wish to commit financially to. Thus Sun Oil and Natural Gas would be getting the field at almost scrap value,” said the banker, the second person cited above.