Gujarat Petro's KG basin gas requires $1.7-billion investment

Directorate General of Hydocarbons (DGH), the central government body controlling the country's oil and gas resources has given its nod to Gurjarat State Petroleum Corporation (GSPC) to produce approximately 2 trillion cubic feet (TCF) of natural gas from the Krishna-Godavari (KG) basin, which involves an investment of about Rs8,000 crore ($1.7 billion).

The approval for field, which is located in the KG-8 Deendayal(DD)-West field in the KG basin, off the coast of Andhra Pradesh, was announced Saturday in Gandhinagar by VK Sibal, director general of DGH following his discussions with GSPC board on the detailed development plan.

Last year Gujarat finance minister Saurabh Patel said that GSPC it plans to invest Rs4,000 crore to develop the KG-8 well over three to four years (See: GSPC claims big gas find at its KG gas field).

''Based on the development plan submitted by GSPC on the basis of exploration work and the geological model analysed by various agencies, we have approved approximately 2 TCF of reserves in KG8 in DD-West of KG Basin,'' Sibal said.

''GSPC has explored very limited portion of its fields and we have also approved its reserves with a conservative approach. However, we have experienced that the operators have produced more than what we approve,'' Sibal added.

The approval is expected to provide a boost to the company's $1-1.5 billion initial public offering (IPO) plan, which was stalled last year due to the financial melt down.