GSPC May Dilute Stake in Some Overseas Assets
The cash-strapped Gujarat State Petroleum Corporation (GSPC) is toying with proposals to dilute part of its operating stakes in overseas assets, preferably in Egypt, to part-finance capital expenditure outlay of nearly Rs 4,000 crore ($754 million) worth of capital expenditure outlay in India and abroad in 2012, Hindu Business Line reported.
The Gujarat Government-controlled company holds operating interest in four exploratory blocks in Egypt, one in Indonesia and three in Yemen.
Though GSPC officials are tight-lipped on the issue, sources close to the development told Business Line that roping in new partners in some of its overseas assets, which are now at an advanced stage of exploration, may help the company to bridge the finance gap.
Other options on the radar include anticipated equity infusion by the Gujarat Government; private placement of fresh shares of GSPC and unlocking value in unlisted city gas entities like Gujarat Gas or Sabarmati Gas.
GSPC is slated to spend nearly Rs 3,500 crore ($660 million) towards the $1.7 billion KG development project in the current fiscal. The capex was part-financed through an approximately Rs 2,500 crore ($474 million) credit line and a previous private placement of 5.78 per cent shares for Rs 990 crore ($187 million). Preliminary estimates suggest that the company may require Rs 3,000 crore ($566 million) or more for capital expenditure towards its KG asset (Deen Dayal) development plan in 2012-13.
While gas is expected to start flowing from the field beginning mid-2013, the fund requirement has gone up following recent devaluation of rupee and the infusion of the new technologies .
Meanwhile, GSPC has launched a six-well exploratory drilling campaign at North Happy offshore block, in the deepwater off Egypt earlier this month . The programme will cost $200 million in the next 8-9 months. In addition, a six-well onshore-drilling campaign, worth nearly $60-70 million, is scheduled to start at South Diyur oil block, also in Egypt, in April.
Considering that the company holds 80 per cent operating interest in both the assets, the total projected fund requirement should be to the tune of $210 million or nearly Rs 1,100 crore. Since GSPC has already entered bonus agreements with the Egyptian government, there is little scope of slowing down the exploratory activities either.
The actual requirement should be even higher as GSPC is preparing to launch seismic data acquisition programme in two more blocks in Egypt. The company holds 60 per cent each in the blocks. Also on the cards is the launch of a one-well drilling programme at the onshore gas block in Indonesia in mid-2012. Additionally, the company has participatory interests in two blocks in Australia.