Jubilant reverses position on â€کDeen Dayal' sale

Vol 13, PW 9 (08 Oct 09) People & Policy

Bhartia family-owned Jubilant Energy has changed its mind about selling a 10% stake in GSPC-operated offshore discovery block KG-OSN-2001/3, home of the Deen Dayal discovery.

Rumours about Jubilant's plans to sell its stake in this block have circulated since May this year. But industry sources tell us Jubilant’s newly appointed chief executive officer Ajay Khandelwal is driving the company forward with a clear focus on exploration and wants to retain the company’s 10% stake.

“Jubilant originally wanted to exit all its gas discovery assets,â€‌ says a source familiar with these developments. “It wanted to farm-out its stakes mainly in Mehsana (CB-ONN-2002/2), Cauvery (CY-ONN-2002/1) and KG since they are gas discoveries.

â€‌ But Khandelwal, a former director at Frontline Corporate Services and with Shell from 2001 to 2006, now wants to enhance and expand Jubilant’s exploration portfolio. “Jubilant will bid for oil and gas blocks in the current (NELP-VIII) round,â€‌ adds a source.

“It will not bid with GSPC, as it has gained experience as an operator. Most likely it will partner GAIL.

â€‌ But while Jubilant has already started working on plans to sell its share of gas from KG-OSN-2001/3 and other discoveries, according to sources, it is likely to sell either a part of, or its entire 20% stake in Tripura-based exploration block AA-ONN-2002/1. Hardly surprising, because selling gas from India’s volatile northeast is not easy, faced with lack of demand, the region’s inaccessibility and simmering insurgencies.

Jubilant was earlier believed to be keen to sell its 10% stake in KG-OSN-2001/3 so it could clear a debt of close to Rs100cr ($20m). But most believe its asking price of $300m was too high.

If Jubilant now plans to retain its 10% stake after all, how will it raise cash for exploration elsewhere Will these funds come from an Indian IPO “Jubilant is planning an IPO,â€‌ says a consultant. "It is too early to say when, but there are definitely some plans.