State-owned Oil and Natural Gas Corporation (ONGC) on Friday said it will acquire 80 per cent stake in debt-laden Gujarat State Petrochemicals Corporation's KG basin gas block for $995.26 million. Under the deal, ONGC will also acquire operatorship of the block KG-OSN-2001/3 in Krishna Godavari (KG) Basin offshore.
"ONGC Board on Friday considered the proposal and approved acquisition of the entire 80 per cent Participating Interest (PI) of GSPC along with operatorship rights, at a purchase consideration of $995.26 million for Deen Dayal West Field in the Block," the company said in a statement here.
Gujarat State Petrochemicals Corporation (GSPC) has already built significant production facilities like well head platforms, process cum living quarter platform, onshore gas terminal, export pipeline for transporting treated well fluid from process platform to onshore terminal etc.
ONGC shall also pay part consideration of $200 million to GSPC towards future consideration for six discoveries other than Deen Dayal West Field, which will be adjusted upon valuation of the these discoveries subsequent to approval their Field Development Plans by DGH / Management Committee of the Block.
"The transaction would be documented by signing a farm-in agreement with GSPC. Requisite approval from the Government will be sought by GSPC in accordance with provisions of Production Sharing Contract of the Block," it said. The trial gas production from Deen Dayal West Field begun more than a year back but commercial output hasn't yet begun.
"Upon successful completion of the transaction, ONGC shall endeavour to bring the field on commercial production along with the existing partners in the Block," it said.
ONGC also finds opportunity to bring the Cluster-I gas discoveries of KG-DWN-98/2 NELP Block and adjacent nomination blocks on a fast track development through utilization of infrastructure of Deen Dayal West Field.
ONGC is the largest producer of crude oil and natural gas in India, contributing around 70 per cent of Indian domestic production. ONGC’s market capitalization as on December, 23, 2016, was Rs 2477 billion ($ 36.47 billion). During the financial year ended March 31, 2016, ONGC Group had produced 57.38 million tonne of oil and oil equivalent gas (mmtoe) (approx. 1.15 mmboe per day).