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Sunday Express: UK majors to fight for Indian gas

By Richard Orange
3 June 2007

BP, Royal Dutch Shell and BG Group are poised to bid for a stake in a giant Indian gasfield worth up to $2billion (£1 billion).

Tomorrow, India’s state-owned Gujarat State Petroleum Company (GSPC) is to take expressions of interest from international oil companies for up to 30 per cent of the fields which it has named Deen Dayal, or Saviour of the Poor.

The auction is one of the most promising opportunities international oil majors have had to gain a foothold in India’s gas-rich Krishna-Godavari basin. Situated off the East Coast of India, the basin has been dubbed India’s North Sea.

BP is looking to India as it faces disappointment in Russia, where its rights to a huge gasfield in Siberia are under threat. The Kremlin is expected to revoke its licence for the Kovykta field within days.

The Deen Dayal sale is part of a drive to exploit India’s oil and gas reserves, which are largely undeveloped.

GSPC has estimated Deen Dayal’s reserves at up to 20 trillion cubic feet of gas, which would make it the largest hydrocarbon discovery yet made in India.

The company is halfway through a 14-well drilling programme to verify its reserves, which have yet to be independently audited.

The company hired Swiss investment bank UBS to run the sale.

Bidders are being asked to put in indicative offers tomorrow. They will then be allowed to examine additional data on the field before submitting a single binding bid towards the end of the summer.

This could bring the British companies head to head with US oil giant ExxonMobil as well as national oil companies such as Brazil’s Petrobras, Norway’s Statoil and Malaysia’s Petronas.

The oil industry’s interest in India was sparked after Reliance Industries discovered a 11.2 trillion cubic feet gasfield in the Krishna-Godavari basin in 2002. Cairn Energy then had success in Rajasthan in 2004.

Recently, the New Delhi government has invited foreign firms to take part in several bidding rounds to win licences for exploration blocks around the country.

Previously, India’s reputation for fearsome bureaucracy, coupled with the dominant position and poor exploration record of the state-controlled Oil and Natural Gas Corporation (ONGC), kept international oil majors away.

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