Anger at GSPC decision to extend deadline again

Vol 22, PW 20 (25 Jul 19) People & Policy
     

Pushing back a bid deadline once, twice, thrice or even four times is bad enough.

But GSPC’s decision to extend its "farm-out’ bid deadline a fifth time to August 31 for 12 assets is pushing its JV partners to despair. Under pressure from ONGC and GAIL, who need more time, GSPC’s constant deadline extensions are drawing complaints from JV partners that critical CAPEX (Capital Expenditure) investment at fields where it wants to sell its stake is neglected leading to stagnation.

"Since a long time no substantial work has taken place at these blocks," says a JV partner. "GSPC is in disinvestment mode and doesn’t want to pump in fresh money.

"Whatever is sunk (cost) is sunk,’ they say." Instead GSPC is happy to honour cash calls for routine OPEX (Operational Expenditure) for existing production but not fresh CAPEX to enhance production or upgrade wells and facilities.

"Everytime we suggest a new project and fresh CAPEX it goes round in a loop from GSPC to us and back to GSPC," adds our source. "Their production department sends us a series of never-ending queries and questions about project economics."

No one doubts these "queries’ are little more than a badly disguised attempt to stall new CAPEX, pending sale of its stakes. "Our interest is jeopardised by this behaviour," says a JV partner.

"How can we recover our investment? Only if you invest money can you add value to the asset."