By the middle of the year 2013, Gujarat State Petroleum Corp (GSPC) may start producing natural gas from the Deen Dayal (DD)-West gas fields in the Krishna Godavari basin (KG basin), media reports indicate.
In mid-2005, the Gujarat government-owned GSPC announced a gas discovery at the DD-west block. Such was the excitement for the state government that Chief Minister Narendra Modi claimed the gas find to be at 20 trillion cubic feet (TCF). Later, the Directorate General of Hydrocarbons certified the same reserves at 2 TCF.
GSPC invested around Rs 7,000 crore in exploration and development at the block in the KG basin. Over the past two years, GSPC spent Rs 3,924 crore on exploration in the KG basin, Gujarat government sources said. GSPC is learnt to have raised a total amount of Rs 7,149 crore through short or long-term borrowings during 2006-11.
It is learnt that production from this block would enable the company to generate sufficient revenues every day to pay off its debts. The block is expected to yield around five million standard cubic metre of gas per day, reports indicate.
The company is said to be carrying out a price discovery exercise. As against the Rangarajan formula that takes the average of netback of liquefied natural gas price and gas prices sold in other regions, the company wants to adopt Reliance Industries (RIL)Â’s original formula of 12.67 per cent of the average Brent crude oil plus $0.26 per million British thermal unit (mn Btu).
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