Though the deal between Gujarat government-owned GSPC and Centre-owned ONGC is being questioned by few, the latter expects to use the infrastructure of the former to produce additional 3 million metric standard cubic meter per day (MMSCMD) of gas from its own fields.
“We are envisaging something around 3 MMSCMD of gas that can be extracted from our adjacent fields using GSPC’s infrastructure as it has a lot of spare capacity. These resources would not have been otherwise exploited,” said an ONGC executive, requesting anonymity, while talking about the strategic advantages of the deal.
State-run ONGC has struck a deal with debt-laden GSPC to buy entire 80% stake in the Deen Dayal gas fields in the Bay of Bengal for $1.2 billion. The move has been questioned by Congress’ Jairam Ramesh who sought a probe by the Securities and Exchange Board of India for flouting guidelines for listing obligations and disclosure requirements apart from not securing approval from minority shareholders.
The claim by Ramesh, however, was dismissed by oil minister Dharmendra Pradhan later saying that the boards of the two companies are competent to take such financial decisions and integration is the way the oil and gas industry is moving world-over.
GSPC, which has been struggling to start from the fields and has a debt of around Rs 20,000 crore, had earlier claimed that the fields have at 20 trillion cubic feet (tcf) of gas reserves which was doubted by the oil industry. Later, the Comptroller and Auditor General of India slammed GSPC in a report and said that as per the approved filed development report, there is 1.9 tcf of reserves with projected cumulative production of 1.06 tcf.
“The GSPC deal fits our overall strategy. We have discovered fields adjacent to the GSPC fields and it has spent a lot to develop knowledge in this area which is relatively new. That learning will be available and it has created huge infrastructure,” said the executive adding the maximum cost incurred to monetise such fields is in developing infrastructure.
GSPC has made nine discoveries in the Bay of Bengal block of which three have been approved for development. ONGC is the largest producer of crude oil and gas in the country with 70% share in domestic production. For the April-December 2016 period, ONGC produced 16,420.24 million metric standard cubic metres (MMSCM) of gas compared with a target of 16,724.08 MMSCM, and 16,629.09 thousand metric tonnes (TMT) of crude against a target of 16,872.80 TMT.