Canada uses diplomacy in Sarus pitch to Modi

Vol 16, PW 17 (21 Mar 13) People & Policy

Canadian high commissioner Stewart Beck wants Gujarat chief minister Narendra Modi to usher through a proposed $100m investment by Canada's Sarus Energy into Gujarat's exploration sector.

Beck wrote to Modi on February 27 outlining the proposed deal, marking copies to Gujarat energy minister Saurabh Patel, Gujarat energy secretary DJ Pandian and others. Sarus wants the stakes held by fellow Canadian company GeoGlobal Resources at four onland Cambay blocks: Tarapur mining lease, Tarapur ring-fenced PSC, Ankleshwar and Sanand/Miroli.

Sarus also wants a chunk of GSPC's stakes at the Tarapur blocks. Beck says Sarus in return is willing to carry GSPC for 95% of future development costs at Tarapur or approximately $100m.

More, Beck promises that Sarus will carry GSPC for all subsurface development and appraisal costs at Tarapur, where new technology can increase production to over 30,000 b/d. He says this would result in a significant revenue hike for GSPC from Tarapur and that future cost recovery would be split by the parties, allowing GSPC to recover the $70m it has sunk into Tarapur till date, besides earning future profits without further investments.

Beck believes the Tarapur deal will help resolve an acrimonious, separate but longstanding $150m 'carried interest' dispute between GSPC and GeoGlobal over offshore KG basin block KG-OSN-2004/1. Beck discloses that Sarus signed a tentative ‘Trust and Assignment’ agreement with GeoGlobal on February 2 this year for the Deen Dayal block under which GeoGlobal will "assign all of its beneficial rights, title and interest in the PSC, Joint operating Agreement (JOA) and Carried Interest Agreement (CIA) to Sarus.

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