The Silicon Review ^Asia

The Oil and Natural Gas Corporation (ONGC)has acquired Gujarat State Petroleum Corp’s (GPSC) stake in a KG basin gas block for about Rs 8,000 crore while the estimated replacement value of the new assets will be USD 1.5 billion at the least. ONGC’s former chairman, D K Sarraf said that the deal is “strategic and of immense value proposition”. He also mentioned that the company, since decades, has been acquiring oil and gas assets along ONGC Videsh Ltd, its overseas investment arm, totaling to 41 projects in 20 countries.

According to him, investing in the 80 percent stake in Deen Dayal West gas field and the government offer of 51.11 percent stake in HPCL is better than going abroad for quality assets. Though, the deal is perceived differently in some quarters, Sarraf believes that the acquisition has cracked a win-win situation for all parties.“They (GSPC) began by asking for Rs 20,000 crore (for stake sale). Negotiations dragged for one-and-half years and we were able to bring them down to Rs 8,000 crore. This when we consider that the value of offshore platforms and onshore gas receipt facility that GSPC has put in Krishna Godavari basin alone is USD 1.5 billion. Plus ONGC got gas reserves”, Sarraf said.

Before the deal with ONGC, there was no gas production from the Deen Dayal block. ONGC, under Sarraf, saw the potential of the infrastructure in Block KG-OSN-2001/3 to bring to production Cluster-1 discoveries in its neighbouring blocks. The company always hoped to become an integrated oil company with business in downstream refining and fuel marketing. The acquisition of Mangalore Refinery and Petrochemicals Ltd was driven by this ambition.