Two years ago, Narendra Modi left Gujarat and made Delhi his home. While he has moved on and outgrown his former job as Chief Minister in Gandhinagar, his opponents in the Congress are clearly still obsessing with Gujarat and Modi’s record there. Evidence of this has come in the past few days from the manner in which the Congress has sought to play up the so-called Gujarat State Petroleum Corporation ‘scandal’.
The issue has been raised in Parliament. Jairam Ramesh, Congress MP and former Union Minister, has written a series of articles on the subject. On closer examination, it appears that the accusations made, and the assumptions and creative interpretations Ramesh and his colleagues have resorted to, are completely incorrect. Far from a scandal, GSPC, a public sector company promoted and owned by the Gujarat Government, needs to be congratulated for striving to strengthen India’s energy security.
GSPC has a 40-year history. Over the decades, it has helped develop a 2,500 km gas transmission pipeline, covering 19 of the State’s 33 districts. Piped natural gas for domestic users (GSPC has one million customers) and gas for industrial use and for power plants are part of its mandate. It is thanks to GSPC that Gujarat has 241 CNG stations, making up a quarter of all such stations in India.
This is a rich legacy and about 15 years ago, GSPC sought to leverage its experience and understanding as a gas marketing and distribution company, take to backward integration and go into exploration in the Krishna Godavari Basin. In 2005, it got lucky. Modi, the then Chief Minister of Gujarat, announced GSPC had discovered what it was felt could turn out to be India’s biggest gas reserves off the eastern coast, touching probably “20 trillion cubic feet”.
This is where the story starts. In the intervening decade, after the discovery, effort and investment has gone into studying financial and technical viability of commercially exploiting that discovery and recovering and producing the gas. The Congress has now alleged that the announcement of 2005 was a hoax, no gas was actually found, and Rs 20,000 crore has been borrowed and spent to camouflage this operation. It was swindled, the Congress has claimed, and Ramesh has gone to town crying “scam”.
What are the facts? First, Ramesh says there is no gas at all. This is absolute bunk. The ‘gas in place’ (GIP) in the block GSPC worked in is certified to be 14.4 TCF at ‘best estimates’ (established) and 23 TCF at ‘high estimates’ (possible). These numbers have been certified by Gaffney, Cline and Associates, a Houston-based consultancy with 50 years of experience in the energy business. For reasons of technical viability, not all the GIP can be recovered. This is true for any gas discovery anywhere, and not unique to the KG Basin. GSPC believes that at a conservative assessment, 34 per cent of the minimum 14.4 TCF is recoverable. The value, at today’s prices, would be four billion dollars.
Developing a gas block can take decades. In the first phase, GSPC is working in a 17 sq km area of its block, called DeenDayal West. Four wells in the DDW zone have been drilled so far. In August 2014, production began in the first three wells and gas from there is being supplied to fertiliser plants in Andhra Pradesh and Gujarat. So far, 8.5 BCF (billion cubic feet) of gas has been produced. The fourth well, said to be the most promising yet, will go into production in a few weeks, “certainly this summer”, according to a GSPC official. To give an idea of the potential of GSPC’s work, that fourth well in DDW alone is expected to produce over 30-35 MMSCFD (million standard cubic feet of gas per day). One MMSCF is the equivalent of 172 barrels of crude oil. So much for the Congress’s ‘zero gas’ theory.
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