The Hindu Business Line : Gujarat State Petro signs deal for first CBM block

THE Gujarat State Petroleum Corporation (GSPC) announced its intentions of being a long-term player in the oil and gas exploration and production (E&P) business when it signed a production-sharing contract for its first coal bed methane (CBM) block on Friday.

GSPC, having won three exploration blocks under the New Exploration Licensing Policy (NELP) IV, has taken its tally to 23 blocks till date; the CBM block marks its premier entry into what is arguably the fuel of the future.

The 790-sq.-km exploration block, BS (3) - CBM-2003/ II, that GSPC won in a joint venture with ONGC, is situated in the border district of Banaskantha, on the other side of which are the recent oil finds announced by Cairns Energy in Rajasthan.

While GSPC has committed investments to the tune of $40 million for three blocks under NELP IV, the total joint venture commitment for the Banaskantha CBM field, in various phases, is put at $700 million.

Though the Banaskantha CBM block, located in the Barmer-Sanchor Basin in Gujarat, has GSPC as a junior partner with 30 per cent stake, it is expected that the company would leverage its home-turf advantage to expedite development activity in this maiden venture. It was the locational disadvantage of the blocks on offer in the first round of CBM in Madhya Pradesh, West Bengal and Jharkhand that had kept the Gujarat company from making an earlier entry into this field.

The three onshore blocks that GSPC and its associates won under NELP IV include two in the Cambay Basin of Gujarat; the third is in Tamil Nadu's Cauvery Basin. The CB-ONN-2002/2 and CB-ONN-2002/3 are located near GSPC's existing Ahmedabad exploration block where the company turned operator, with Gail India as 40 per cent equity partner.

The latest venture would be the fourth instance of GSPC taking on the role of operator in an exploration block. GSPC, with 60 per cent stake, is operator in CB-ONN-2002/3 while the other equity holders are GeoGlobal Resources and Jubilant Enpro, the same consortium that won the KG-OSN-2001/3 block in the previous round of bids. Though GSPC has 55 per cent equity in the CB-ONN-2002/3, it is Jubilant Enpro that is the operator there, the other partners being GeoGlobal Resources and Prize Petroleum.

The Gujarat company has a 20 per cent stake in the Cauvery field, its partners there being Gail, with 50 per cent, and Enpro Finance, with 30 per cent, turning out as operator.