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Vinod Mathew

AHMEDABAD, June 20

IF GAIL stole the thunder from the Gujarat State Petroleum Corporation (GSPC) by using no less a person than the Union Minister for Petroleum and Natural Gas, Mr Ram Naik, in Mumbai on Wednesday to make a pre-emptive announcement of the oil and gas strike at the Ahmedabad Exploration Block (AEB), it was just the first salvo in the gas transmission company's initiative in larger role for itself in Gujarat.

It transpires that GAIL has been mounting pressure on GSPC to shed 10 per cent equity in the exploration block, CB-ONN-2000/1, in its favour so that both entities enjoy 50 per cent stake each.

The GAIL interest in the lucrative exploration field follows Joshi Technologies Ltd (JTL), the third member of the consortium that bid for the block under NELP II, selling its 20 per cent stake in favour of GSPC. Originally, the equity stake in the exploration block was GSPC and GAIL - 40 per cent each and JTL - 20 per cent. It is understood that GAIL has the Ministry of Petroleum and Natural Gas backing in the bid to augment its stake in the field, though it is not pressing any claim for change in status of the operatorship that rests with GSPC.

However, the GSPC is wary that once GAIL is allowed to hike its stake in AEB to 50 per cent and allow it an equal stake in the project, it may be merely a matter of time before GAIL has ago for the operatorship of the field. The newfound interest of GAIL in the field is underscored by prognosticated reserve estimates in one of the wells estimated at 10 million barrels of oil and 300 billion cu.ft of natural gas.

While only one exploratory well has been drilled till date, the drill stem testing (DST) of the well has found oil and gas at four levels - 1179-1186 metres, 1195-1255 metres, 1239-1243 metres and 1360-1380 metres. The GSPC is planning to drill up to 2000 metres before commencing the drilling of the second well later this month.

It is not for the first time that GAIL has evinced interest in seeking a major role for itself either in GSPC or in some of its sister companies. The gas transmission major already has a 11 per cent equity stake in the GSPC-promoted Gujarat State Energy Generation (GSEG), the Rs 576 crore, 156 MW power project at Hazira. And the equity sale of the Gujarat State Petronet Ltd (GSPL), yet another GSPC-promoted company has been stuck as some of the interested parties such as GAIL have been seeking 33 per cent stake as against a 11 per cent ceiling that the GSPC wants to impose.

GAIL has never hidden its interest in becoming a serious player in laying transmission pipelines in Gujarat. Towards this, it has been carrying on parleys with GSPL to iron out a `co-operation agreement'. However, with the GSPC subsidiary indicating its unwillingness to await a pan-India Gas Transmission Act and carrying on laying trunk route pipelines which would in the next phase bring gas up to Ahmedabad, GAIL seems to be have played out its hand as far as its Gujarat aspirations go. That is, unless it manages to get into a position of power with GSPC by gaining equal foothold in lucrative fields such as the AEB.

The GSPC-GAIL consortium, as per the production sharing contract with the Union Government, is required to pump in Rs 100 crore towards the development of the block. Of this, Rs 35 crore is earmarked for the development of the seven exploratory wells. The consortium has already acquired the 3-D seismic data for a 200 sq km area at the CB-ONN-2000/1, which is located near the Ingoli village in the Dholka region of Ahmedabad district.

It has been the GSPC stand that the DST data concerning the flow of oil/gas at AEB is currently under evaluation and the commercial viability of the strike will be announced in due course of time, indicating its displeasure in GAIL, till date a junior and non-operating partner, making an announcement on the oil/gas strike without taking the operating partner into confidence. The Gujarat Government's decision to play down the strike comes even as GAIL has increased pressure on GSPC and its sister companies for a larger role than what it enjoys at present.

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