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Gujarat Petroleum to invest Rs 4 billion

Gujarat State Petroleum Corporation will invest Rs 4 billion in the next three to four years in a bid to emerge as India's second largest oil exploration and production firm, its chief said on Wednesday.

GSPC, which produces about two million cubic meters of natural gas and a few hundred barrels of crude oil a year, is a small player in the Indian oil sector.

Oil and Natural Gas Corporation is the country's largest oil exploration and production company with annual production of about 25.1 million tonnes of crude followed by Oil India Ltd, Shell and Cairn Energy.

"GSPC will become the second largest E& P (exploration and production) company in the next three to four years and we plan to invest about Rs 4 billion," GSPC managing director Sanjay Gupte told Reuters in an interview.

Gupte said the company was hoping to ride its way up through three oil blocks awarded to GSPC and its partners for exploration under the federal government's New Exploration Licensing Policy.

Last month, a GSPC consortium won two off-shore oil blocks on the western coast for exploration and another onshore block in Cambay basin in Gujarat in a tie-up with state-run Gas Authority of India Ltd and US-based Joshi Technology.

The three were among 23 oil blocks awarded by the government to domestic and international companies for exploration and development as part of the NELP, a key liberalisation plank of energy-deficient India's decade-old economic reforms programme.

Gupte said the firm would fund its exploration costs through internal accruals and loans from financial institutions.

"We are in a strong position to raise adequate funds for expansion. We have enough internal accruals and securitisation of assets with financial institutions has emerged as an easy way to get funds," he said.

The company recently raised Rs 1.2 billion through a securitisation deal with domestic lending institution ICICI Bank.

The unlisted GSPC, which posted a turnover of Rs 1.35 billion for the year ending March 31 2001, had a net profit of Rs 450 million. Gupte said GSPC would become a Rs 10-billion company by 2004-05.

GSPC is considering an initial public offering to raise funds for its expansion plans. "I consider an initial public offering as a good way to raise funds and GSPC being a strong performer would be well received by the market," he said.

He said no timeframe had been set for entering the primary market since the Gujarat government, which owns 90 per cent of the company, was yet to take a decision.

The remaining 10 per cent of GSPC's equity is held by a number of state-run entities.

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