Hyderabad|India|October'2009: Krishna-Godavari Basin, located on the eastern coast of Andhra Pradesh, is one of the most promising areas for Exploration & Production of Oil & Natural Gas. It is projected to be one of the largest Oil / Gas fields in the world. Although the development of the area for exploration commenced over a decade ago, the State Government did not participate in the activity, so far. In this connection, Director General, Hydrocarbons made a presentation to the former Chief Minister, Dr.Y.S.Rajasekhara Reddy on 11.08.2009, wherein he stressed the need for the participation by the State Government in the Upstream (Exploration & Production), Midstream (service sector) and Downstream (distribution) activities of petroleum and natural gas sector by playing a role of facilitator, which will help in optimizing the utilization of gas in the State, thereby, ensuring industrial growth, city supply and employment generation.

Keeping this in view, a decision was taken to form a Special Purpose Vehicle with APIIC and APGENCO holding the equity at a ratio of 51% and 49%, respectively. Accordingly, Andhra Pradesh Gas Infrastructure Corporation (APGIC) was incorporated on 2nd September, 2009.

As the NELP VIII round of bidding was scheduled for 12th October, 2009, efforts were made to identify suitable partners, with the required technical expertise and financial clout, in this regard. After discussion with the officials of ONGC, it was decided to become a part of the ONGC led consortium, considering their extensive presence in the KG Basin area and the past experience in the field. It is pertinent to note that ONGC is the largest public sector undertaking in India and the most experienced player in the exploration business. As per its mandate, APGIC has to play the facilitator role and therefore, it was decided to restrict the participation by APGIC to 10% in the ONGC-led consortium, while bidding for all the 5 blocks in K.G. Basin under NELP VIII. APGIC, as the consortium member of ONGC, participated in bidding for all the 5 Blocks (one Deep Water and 4 Shallow) and won 4 Blocks (one Deep Water and 3 Shallow). The details of which are, as follows:

Deep Water Block KG-DWN-2009/1 (A&B), area 800 Sq. km., won by APGIC consortium, with the following partners:

ONGC 40%
BG (British Gas) 35%
Oil India Ltd. 15%
APGIC 10%

Projected investment for this Deep water Block in the next 4 years would be approximately Rs.200 crores for the seismic survey etc., out of which 10% i.e. Rs.20 crores will be borne by APGIC.

Of the Shallow Blocks, APGIC consortium won 3 out of 4 blocks put up for bidding, as per the details given below:

Block 1: KG-OSN-2009/1, area 1472 Sq. km.
Consortium ONGC 80%
APGIC 10%
NTPC 10%
(GSPC and OIL competed unsuccessfully for this Block)

Block 2: KG-OSN-2009/2, area 1471 Sq. km.
Consortium ONGC 90%
APGIC 10%

Block 3: After intense competition among 5 bidders (including APGIC consortium) Cairn India consortium won the Block.

Block 4: KG-OSN-2009/4, area 835 Sq. km.

Consortium ONGC 50%
Oil India 30%
APGIC 10%
NTPC 10%
(Jindal and Jubilant competed unsuccessfully for this Block)

This marks an impressive entry of the Government of Andhra Pradesh into the E&P activity in KG Basin and winning 4 blocks out of the 5 in the area is a remarkable achievement in a short span of 2 months since the decision was taken, in the matter. This will pave the way for speedier utilization of Oil & Natural Gas in the area, which will help in optimising industrial growth, as well as, employment generation, apart from fulfilling the dream of supply of gas to every home in the major towns of the State and C.N.G. for transport sector.