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Gail plans to boost oil hunt

Calcutta, Jan. 4: Gail (India) Ltd plans to strengthen its exploration and production activities in India and abroad in the next financial year to become a major player in the oil and gas sector.

Sources said Gail has decided to double its investment in the exploration and production in 2004-05 to consolidate its position in upstream activities.

The gas pipeline major has an investment target of over Rs 250 crore in 2004-05 against Rs 100 crore now. The investment will help the company, already involved in 10 exploration blocks, make a mark in the entire hydrocarbon value-chain over the next few years.

It plans to take more oil blocks in the Tripura and Cauvery basins, and join the race for coal-bed-methane (CBM) blocks, sources said.

Gail, which has a big market share in the oil and gas pipelines at home, is considering purchase of stakes in proven fields abroad. The investments in these fields are likely to be made separately, sources said.

The PSU is in talks with Shell for a 15 per cent stake in an offshore medium-sized gas field in Egypt, and for a slice of equity in two city-gas distribution firms there. Shell is also reported to have offered Gail a 19 per cent equity in Fayum Gas Company and a 10 per cent equity in Shell CNG Company (both in Egypt).

Sources said the financial, legal and technical due diligence for both have been completed and valuation and other terms and conditions for investment are under discussion.

Gail currently has a 10 per cent stake in the A-1 gas field off Myanmar's north-western coast. The company is also evaluating city gas projects in several countries to expand its international operations.

A long-term association with Shell would be beneficial for the companies as both are looking into various projects worldwide, sources said.

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