After failing to convince Reliance Industries Ltd (RIL) to give priority to the state in gas allocation, Andhra Pradesh is planning to lobby the Centre for allotment of oil and gas fields.
Though the government has already started working on the modalities for competing for the fields in the Nelp-VIII bidding rounds, the state is pinning hopes on convincing the Centre to allot it fields independent of the bidding process.
The Andhra Pradesh state government is basing its argument on the government-to-government (G2G) model, which would not provide for any commercial use of the gas found in these fields. It is mulling a plan to use the gas pumped from its fields for captive purposes, mostly power generation projects set up by state-owned utilities.
According to sources in the government, the top brass of the state have already apprised the director-general of hydrocarbons (DGH) of the need for the Centre to accord Andhra Pradesh special status and allot it oil and gas fields independent of Nelp bidding.
“We have seen the case of Reliance. The state government is still fighting for its right over the gas in the Krishna-Godavari basin. The state is standing as a mute spectator even as the gas is being taken out of the KG basin, which is in the state’s territory. The only option for the state, apart from continuing to fight with Reliance for its share, is to own the fields and make use of the gas for the infrastructure projects,” a source close to the developments said.
“The state has no motive of making profits out of gas. It would be used for development of infrastructure in the state. So, asking the state to compete with private entities for owning the field would not offer a level-playing field,” the source explained.
The Andhra government is also working on a plan to form a special purpose vehicle with two state entities — the Andhra Pradesh Industrial Infrastructure Corp (APIIC) and the power generation utility AP Genco — as partners to bid in the Nelp-VIII rounds.
Officials say Nelp-VIII bidding would happen some time in October and the government would have a final plan by that time.
The Gujarat government is way ahead in this process — its Gujarat State Petroleum Corp has significant gas assets. Officials said Andhra Pradesh missed the bus long back, during the regime of N Chandrababu Naidu.
Naidu was not in favour of the government getting into the oil and gas business and wanted to leave the field open to the private entities.
Earlier, the Andhra government was working on a plan to own a gas pipeline network rather than oil fields. It had also formed a new entity — Krishna Godavari Gas Network Ltd — for laying a pipeline network across the state and planned to ask private producers like Reliance to use the network for transporting gas.
However, the pipeline proposal did not find much encouragement from the gas regulator. The Andhra government now wants to own a field first and then work on the gas network, which, being more viable combination, might satisfy the regulator.
Captive resource
Andhra is basing its argument on the government-to-government model, which would not provide for commercial use of gas found in these fields.
It is working on a plan to use the gas for such fields for power generation projects set up by state-owned utilities.