Andhra Pradesh floats joint venture to enter oil and gas sector


Hyderabad : The Andhra Pradesh government has floated an exploration company to commercially tap the hydrocarbon resources in the Krishna-Godavari (KG) basin off its coast.

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The company, Andhra Pradesh Gas Infrastructure Corp (APGIC), has been set up on the lines of Gujarat State Petroleum Corp (GSPC), an oil and gas exploration and production company that operates across India and overseas.

A decision in this regard was taken Tuesday at a meeting of the board of Andhra Pradesh Industrial Infrastructure Corp (APIIC), which will have 51 percent stake in the company.

Power Generation Corp of Andhra Pradesh will hold the remaining 49 percent.

The new company will engage in exploration, production and transportation of gas and ensure optimum utilisation of oil and gas available in the KG basin.

It would also participate in the country’s largest auction of oil and gas blocks through the eighth round of auction of oil and gas reserves.

The company is likely to appoint a consultant to prepare a roadmap before bidding and rope in a strategic partner with technical expertise in oil and gas exploration.

India is set to auction 70 exploration blocks, including 24 deepwater and 28 shallow water blocks.

The decision to float a special purpose vehicle (SPV) for oil and gas exploration came after Director-General of Hydrocarbons V.K. Sibal last week recommended that the state enter into the supply chain.

Making a presentation on various options and opportunities before Chief Minister Y.S. Rajasekhara Reddy here Aug 11, Sibal advised the state to enter the sector as 89 percent hydrocarbons in the KG basin still remain unexplored.

Sibal, however, had cautioned the state against going it alone as Gujarat and Assam had done earlier, saying these states are finding it tough to identify technical partners to overcome operational problems.

The move to set up the joint venture comes amid concerns over the state losing its “due share” in the resources found off its coast.

Earlier, the chief minister had said that the state has to get its due share of the hydrocarbon asset found in the KG basin.

Opposition parties have claimed that the gas was being taken out of the state without meeting its requirements.

Out of four companies that were awarded various blocks in the KG basin by the government, only the Mukesh Ambani-led Reliance Industries (RIL) has started gas production.

RIL started supplying gas from the first week of April beginning with five million units. Its production reached 31 million units Aug 1.

Besides setting up the joint venture, APIIC has also decided to take 5 percent equity in Bhagyanagar Gas Ltd (BGL), a joint venture between HPCL and GAIL India.

Bhagyanagar Gas along with Krishna Godavari Gas Network, another state-promoted firm, will execute a Rs.1,000-billion city gas distribution project.

Under the project, the companies will source KG gas and supply it fort domestic, commercial and industrial purposes in Hyderabad and other major cities in the state.