The Hindu Business Line : GSPC strikes oil at Ahmedabad block

GUJARAT State Petroleum Corporation Ltd (GSPC) has struck oil at its Ahmedabad exploration block (CB-ONN-2001/1) at Dholka where it has a 50:50 joint venture with Gail (India). The initial oil in place (OIP) estimates has been put at 50 million barrels.

At a conservative estimate of 10 per cent recovery, the oil from this single well alone is expected to be worth 5 million barrels. Thus, the monetisation of oil from this one well has been put at over Rs 1,000 crore, at the current rate of $45 per barrel.

According to State Government sources, the oil has been struck in the sixth well that the GSPC, as operator of the field had perforated. The oil was found sprouting from the well some three days ago and after monitoring it for 48 hours and finding the oil flow to be steady, the GSPC confirmed the oil strike.

The well has steadied at a daily output of 1,000 barrels and is expected to go up to 5,000 barrels at which level the reserves should last for three years. As this well covers a 10-km span, there is one school of thought that is convinced that the present oil strike is merely the beginning. The first well, deemed marginally successful, was drilled in May 2003.

It may be recalled that there was much friction between GSPC and Gail for the operatorship of the Ahmedabad field once the third partner of the consortium which won the exploration block under NELP II, Joshi Technology, offloaded its 20 per cent stake in favour of the Gujarat company. Therefater, the announcement of oil discovery at the first well a few months ago was made independently by both the companies.

At that time, the equity stake was loaded 60:40 in favour of GSPC. Since then, after protracted negotiations, it was decided to split the 20 per cent equity equally between GSPC and Gail. Significantly, GSPC's decision to retain the operatorship of the block seems to be paying off with the recent oil strike, which could trigger fresh exploration activity in the region.