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ONGC inks preliminary agreement to acquire stake in GSPC’s KG basin gas block

10 Oct 2016 Evaluate

Oil and Natural Gas Corporation (ONGC) has inked a preliminary agreement to take an operating stake in Gujarat government firm Gujarat State Petroleum Corp (GSPC)’s KG basin gas block. The Memorandum of Understanding (MoU) signed last week has a dispute resolution mechanism set out wherein any differences over issues like valuation or natural gas reserves would be referred to a three-member committee of outside experts.

ONGC initially was not keen to buy stake in the block as it felt the block had reserves far less than what GSPC was claiming and the asking price for the stake was not commensurate with the returns. GSPC was to begin gas production from the block in 2013 but after sinking in $3.6 billion it was found that gas reserves are one-tenth of 20 trillion cubic feet claimed in 2005 and that too is technically difficult to produce.

ONGC is India’s largest government-run corporation and produces about 70% of India’s crude oil and natural gas. The corporation is the biggest public sector commercial organization in India with current market capitalization of about $31 billion.



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290.05 -2.75 (-0.94%)
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Company Name CMP
ONGC 290.05
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