Singapore targets GSPC for possible investment

Vol 15, PW 10 (17 Nov 11) People & Policy

Singapore could soon be playing a key role in the commercialisation of GSPC’s Deen Dayal discovery, where first production is slated for mid-2013.

PETROWATCH learns a six-member delegation from the Government of Singapore Investment Corporation led by managing directors Kunna Chinniah and Chua Lee Ming held a meeting with Gujarat chief minister Narendra Modi and principal secretary finance MM Srivastava in Gandhinagar on October 12 for talks on a possible cash infusion to help GSPC with its exploration programme in India and abroad. “This was only the first meeting,” reports a source.

“As yet we don’t know how much equity GIC will be allowed to pick up, or at what price.” Not in doubt is that the Singapore delegation made clear it would be carrying out a thorough SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis of GSPC before making any firm investment decision.

In private, sources in Gandhinagar tell us GSPC may be ready to divest anything between five and seven percent to the Singapore government backed investment fund. If the deal goes through it would be the second time GSPC offloads equity through a private placement.

State-owned Indian investment bank SBI Caps and nine other companies acquired 5% of GSPC in December 2009 in exchange for a cash infusion of Rs1040cr ($205.94m) at Rs81/share. Cash-strapped GSPC is already in debt to the tune of Rs12,863.18cr ($2.54bn) and finding it hard to raise an estimated $300m needed immediately to finance offshore development at its Deen Dayal block and a proposed six-well drilling campaign at its offshore North Hap’y block in Egypt slated to begin at the end of this year.

Huge expenditure is expected at Deen Dayal. In its Field Development Plan submitted to the DGH, GSPC pegs the cost of developing Deen Dayal West at $1.8bn but till date it has spent $1.5bn.

This is expected to rise to $2.1bn.