GAIL, HPCL in pact for E&P, city gas projects

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Mr Proshanto Banerjee, CMD, GAIL (India), (left) exchanging documents with Mr M.B. Lal, CMD, HPCL, after signing the MoU in the Capital on Wednesday. Ramesh Sharma
Mr Proshanto Banerjee, CMD, GAIL (India), (left) exchanging documents with Mr M.B. Lal, CMD, HPCL, after signing the MoU in the Capital on Wednesday. Ramesh Sharma

Our Bureau

New Delhi, Nov. 16

FOR pursuing exploration and production (E&P) opportunities in India and overseas, GAIL (India) Ltd and Hindustan Petroleum Corporation Ltd (HPCL) on Wednesday inked a memorandum of understanding (MoU).

The two state-owned companies also signed an agreement for forming separate joint venture companies for implementation of city gas projects in Madhya Pradesh, Rajasthan and Gujarat for supply of piped natural gas to domestic, commercial and industrial consumers and compressed natural gas (CNG) and auto LPG to automobiles.

Exploration and production: Recognising the potential of adding value to their business by a co-operative approach based on their complementary skills and strengths to jointly exploit E&P opportunities, the two have entered into this agreement, said Mr Proshanto Banerjee, Chairman and Managing Director, GAIL, after signing the MoU.

The two have approached the Ministry of Petroleum and Natural Gas seeking special dispensation from the Government for securing approvals for overseas investments in E&P projects in line with ONGC Videsh Ltd (OVL)/IOC-OIL combined, he said.

As part of the understanding, GAIL and HPCL will jointly prepare a blueprint for an E&P business model for India and overseas ventures.

The two will identify and evaluate E&P opportunities in India as well as countries in South/South East Asia, West Asia, West and East Africa, Australia, Russia and CIS, said Mr Banerjee.

The two companies will also jointly bid for E&P blocks under the New Exploration Licensing Policy and coal bed methane bidding rounds in India as well as bidding rounds of exploration blocks in target countries.

The two will also jointly secure `farm-in' options in already awarded exploration blocks and study acquisition of producing assets, reserves as well as E&P companies.

A joint team of GAIL and HPCL is being formed to undertake the evaluation and identification of project opportunities.

As regards identified projects for joint participation, GAIL and HPCL will enter into a specific consortium MoU/joint bidding agreement or form consortia/SPV/JVs for implementing the projects on a case-to-case basis.

Recently, the two companies jointly participated in Australia's E&P bidding rounds. GAIL and Prize Petroleum, a subsidiary of HPCL, have joined together and submitted bids for two E&P blocks in Australia along with GSPC (India) and Oilex NL (Australia).

City gas projects: GAIL and HPCL have formed Bhagyanagar Gas Ltd for implementation of a city gas project in Andhra Pradesh.

In the joint venture, GAIL and HPCL will have an equity of 22.5 per cent each, and 5 per cent equity will be offered to the respective State Governments and the balance to financial institutions or strategic partners or the public.

In Madhya Pradesh, the projects will be set up initially in Indore, Gwalior and Ujjain, in view of the upcoming Jagoti-Pithampur and Kailaras-Malanpur pipelines.

In Rajasthan, it will be set up initially in Kota following the upcoming Vijaipur-Kota-Mathania pipeline. In Gujarat, GAIL is already supplying CNG in Baroda city and HPCL is setting up infrastructure in Ahmedabad for supply of CNG.

(This article was published in the Business Line print edition dated November 17, 2005)
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