Ahmedabad: The board of state-run Oil and Natural Gas Corporation Ltd (ONGC) on Friday approved the plan to acquire the entire 80% participating interest of Gujarat State Petroleum Corporation Ltd’s (GSPC) block in Krishna Godavari basin for $995.26 million.

In a statement to the media, ONGC said, “ONGC Board today considered the proposal and approved acquisition of the entire 80% 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 acquisition of PI and operatorship rights in the Block fits well with the strategy of ONGC to enhance natural gas production from domestic fields on a faster pace, more so with a goal to reduce import dependency of hydrocarbons by the 10% by 2021-22. The trial gas production from Deen Dayal West Field has already 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,” the statement added.

According to ONGC, the Deen Dayal Field will act as a pivot in developing nearby discoveries in Yanam and Godavari PML areas of ONGC, simultaneously. Through the utilisation of infrastructure of Deen Dayal West Field, ONGC will be able to bring the gas discoveries of KG-DWN-98/2 NELP Block and adjacent nomination blocks to production on a fast track. GSPC has already built production facilities like well head platforms, process cum living quarter platform, onshore gas terminal and export pipeline for transporting treated well fluid from process platform to onshore terminal in the area. ONGC is the largest producer of crude oil and natural gas in India, contributing around 70% of Indian domestic production.

ONGC will 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 the Directorate General of Hydrocarbons. 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.

The block, KG-OSN-2001/3, was allotted to GSPC during the third round of the National Exploration Licensing Policy (NELP), through which awards hydrocarbon assets for exploration and production.