Despite a deep funds crunch, the premier state public sector undertaking (PSU), Gujarat State Petroleum Corporation (GSPC) will not be dropping its plan to continue with oil and gas exploration in Egypt. Gujarat chief secretary A K Joti, who led a team of officials last week to ascertain whether to continue with the GSPC’s Egyptian operations, told TOI that "high risk in exploration there is worth taking" and the state government will "find money" for it.

"We have several options. One of them for GSPC is to go for initial public offer (IPO), once results from the exploration are available. The other is have private funding", Joti said. Already, GSPC is in negotiations with the Government of Singapore Investment Corporation (GSIC), which has agreed in principle to fund the PSU’s exploration activities.

"Preliminary results through aerial surveys suggest there is huge oil and gas reserve in the Egyptian areas which we had taken for exploration. There is no question of backing out, though the final decision will have to be taken by Gujarat government," Joti, who is also the GSPC chairman, said.

As part of its plans to go multinational, in mid-2000 GSPC took five blocks in Egypt, and a few more in Yemen, Indonesia and Australia. One of the Egyptian blocks is onshore, situated in a huge expanse of 39,000 sq km area, most of it desert, while the rest of the four are offshore, deep in the Mediterranean. The deadline for exploration for the onshore block and one offshore block was to end in March 2012.

The Egyptian government officials, with whom the chief secretary and other officials held discussions, "agreed" that there was delay in the GSPC’s exploration activities as the PSU was not given necessary clearances on time for preliminary surveys, required from the country’s defence establishment.

"Egyptian government officials not only readily allowed the GSPC to continue with the two blocks where work is on, giving us one year extension, but also wanted us to sign up an agreement to begin exploration work in the other blocks, where the work hasn’t yet begun," Joti said.

Joti, helped by Indian ambassador in Cairo R Swaminathan, held discussions with officials of the Egyptian Natural Gas Company and Ganoub El-Wadi Petroleum Holding Company. Two Central government PSUs, Oil India Corporation and Hindustan Petroleum Corporation Ltd, and the Adani Group, are junior partners with GSPC in individual blocks in exploration.

Withdrawal from Egypt would have meant the state government would have to pay about $250 million as bank guarantee for being a "defaulter."

Source: The Times of India