Oil and Natural Gas Corporation (ONGC) is in talks with Gujarat State Petroleum Corporation (GSPC) for acquiring a stake in its gas field in the Krishna-Godavari Basin, ONGC chairman and managing director, D.K. Sarraf said.
“We have been talking to GSPC for acquiring a certain percentage stake in their field… some technical studies have been done on the field since it’s a difficult field and the investment is high,” Mr. Sarraf told reporters after an annual general meeting of ONGC in the capital.
ONGC, the country’s flagship public sector oil and gas explorer, has appointed Ryder Scott as a technical consultant for evaluation of the GSPC’s assets and Mr. Sarraf said that the evaluation is currently underway. GSPC owns an 80 per cent participating interest in the KG Basin block while Jubilant and Geo Global Resources have 10 per cent each. Heavy investments in the block had driven GSPC’s debt to Rs.19,700 crore by the end of March 2015.
Oil Minister Dharmendra Pradhan had recently said that the government would have no objection if ONGC and GSPC reached an understanding on a stake sale.
Mr. Sarraf expressed surprise that the Justice A.P. Shah committee report, which has confirmed the PSU firm’s apprehension that gas had flown from its gas block in the KG basin to an adjoining block owned by Reliance Industries (RIL), implies that ONGC was aware of the problem earlier but remained silent till 2013.
“The A.P. Shah Committee has confirmed that gas has flown from our field to Reliance Industries’ field and a significant portion has already been produced. Many consequences follow out of that, including whether we get paid or the government of India should get paid (for unjust enrichment),” the ONGC chief said.
“We told the committee we had no knowledge of this earlier. It was a very tough statement to make when we raised our apprehensions (but) as soon as we got to know, we took action in 2013 by approaching regulatory authorities,” Mr. Sarraf said, adding that the strong submissions on this aspect made to the committee have not been mentioned in the report.
“It seems there is no mention of our submission on this in the report and I don’t know the reason why that’s not part of the report,” he said. The committee’s report, submitted on August 31, noted that Reliance should pay the government for unjust enrichment by drawing gas from an adjacent block, but also recorded an RIL charge that ONGC knew of the connectivity issue way back in 2007.
When asked if ONGC was confident of getting the government’s support in its dispute with Reliance, given that Prime Minister Narendra Modi’s image was used in an ad for Reliance’s new telecom business soon after Mr. Pradhan committed to act on the A.P. Shah report, Mr. Sarraf said the two issues are unrelated.
“The current government is acting without any bias for public or private sector players. This is my firm belief. That the government itself appointed a committee to look into the matter confirms it means business,” Mr. Sarraf said.
India’s oil demand in the first quarter of this fiscal grew at the fastest pace for any first quarter period in the past 10 years. The country consumed 48.5 million tons of oil products in the quarter, an increase of 7.8 percent from the same period a year ago, data from the Oil Ministry showed. India is expected to lead oil demand this year, according to the International Energy Agency, surpassing Japan as the world’s third-largest oil user.