New Delhi, Dec. 23: State-owned Oil and Natural Gas Corporation (ONGC) today said it would acquire an 80 per cent stake in debt-laden Gujarat State Petroleum Corporation's KG basin gas block for $995.26 million.

Under the deal, ONGC will acquire the right to operate block KG-OSN-2001/3 in the Krishna-Godavari (KG) basin offshore.

"The ONGC board today considered the proposal and approved the acquisition of the entire 80 per cent participating interest of GSPC along with operatorship rights at a purchase consideration of $995.26 million for the Deen Dayal West field in the block," the company said in a statement here.

Gujarat State Petroleum Corporation Ltd (GSPC) has already built significant production facilities such as well-head platforms, process-cum-living quarter platform, onshore gas terminal and export pipeline to transport treated well fluid from the process platform to the onshore terminal.

ONGC shall also pay part of $200 million to GSPC as future consideration for six discoveries other than the Deen Dayal West field, which will be adjusted after the valuation of these discoveries.

"The transaction will be documented by signing a farm-in agreement with GSPC. Requisite approval from the government will be sought by GSPC in accordance with the provisions of the production-sharing contract of the block," it said. The trial gas production from the Deen Dayal West field begun more than a year back but commercial output hasn't yet begun.

"Upon successful completion of the transaction, ONGC shall endeavour to bring the field to commercial production along with the existing partners in the block," it said.

ONGC will also be able to use the infrastructure of the Deen Dayal field to fast track the development of the cluster-I gas discoveries of KG-DWN-98/2 Nelp block and adjacent nomination blocks.