ONGC, GSPC in 'commercial discussions' on KG block: Dharmendra Pradhan

NEW DELHI: The government will have no objection if Oil and Natural Gas Corp reaches a deal with Gujarat State Petroleum Corp (GSPC) on purchasing a stake in the latter’s project in the KG Basin, Oil Minister Dharmendra Pradhan said.

“If the two companies together reach a common understanding while keeping paramount the profitability of both companies, then we should have no objection,” Pradhan said, responding to Congress spokesperson Jairam Ramesh’s allegation that the government is encouraging ONGC to take over GSPC’s block in the KG Basin.

GSPC owns an 80% participating interest in the KG Basin block while Jubilant and Geo Global Resources have 10% each. Heavy investments in the block had driven up GSPC’s debt nearly threefold in four years to Rs 19,700 crore at the end of March 2015.

Pradhan told ET in a recent interview that the two companies were commercially discussing the matter for mutual benefit, and that his advise to the firms was to use common facilities and make a joint strategy, just like global firms such as BP, BG, Chevron and Exxon do.

The Comptroller and Auditor General (CAG) criticised GSPC in a recent audit for deficient implementation, cost overruns and inability to induct a strategic partner in time.

The field hasn’t yet started commercial production of gas, running almost four years behind schedule.