Gujarat State Petroleum Corp. Ltd (GSPC) has revived its plan to sell stakes in 20 of its onshore oil and gas blocks, two people aware of the development said.
The Gujarat government owned company had decided to sell these stakes last year but decided to first complete the sale of its offshore Deen Dayal block stake to Oil and Natural Gas Corp. Ltd (ONGC). That deal was completed recently.
“Now that the Deen Dayal block deal with ONGC is complete, GSPC is looking at pruning its exploration and production portfolio further and thus plans to sell stakes in the other blocks,” said one of the two people mentioned above, both of whom spoke on condition of anonymity.
On 4 August, ONGC said it has completed the Rs7,738 crore acquisition of 80% stake in GSPC’s KG basin gas block. Last December, ONGC had agreed to buy GSPC’s entire 80% interest in Deen Dayal West (DDW) gas field in Block KG-OSN-2001/3 in the Bay of Bengal for Rs6,443 crore. ONGC had also agreed to pay part consideration of Rs1,295 crore to GSPC towards acquisition rights for the discoveries.
GSPC did not reply to an email seeking comment sent on 4 August.
The Gujarat government owns 87% in GSPC. The company last year hired consulting firm EY to prepare a report on the blocks for the stake sale. GSPC holds a participating interest in 24 blocks, of which 20 are onshore and four offshore.
Seventeen onshore blocks are producing properties. Of the 24 blocks held, GSPC is an operator in six blocks and a non-operating partner in 18.
On 9 August, Mint reported that billionaire Dilip Shanghvi’s Sun Oil and Natural Gas is close to acquiring GSPC’s 66.67% stake in the Hazira gas field located in the Cambay basin in Gujarat.
The deal is expected to close by September.
The purchase would give Sun Oil and Natural Gas full control of the gas field, in which it bought a 33.3% stake from Canada’s Niko Resources Ltd in December for an undisclosed sum.
“GSPC will continue with E&P activities but whichever block is not a lucrative one for GSPC, it will get out of it. After Deen Dayal block, sale of other blocks is imperative,” said the second person cited earlier.
GSPC is currently undergoing a business restructuring advised by investment banker SBI Capital Markets, the second official added.
GSPC had invested $3.5 billion (approximately Rs20,000 crore) in its Deen Dayal block, which burdened the company with debt.
Sale proceeds from the block have been used to pare debt.
Source: Mint