After a much debated exit from its Krishna-Godavari Basin gas block, Gujarat State Petroleum Corporation Ltd (GSPC) is set to re-enter it by acquiring Geo-Global Resources’ 10 per cent stake.

In December last year, GSPC, operator of KG-OSN-2001/3, had sold its 80 per cent stake for about $1.2 billion (₹8,100 crore) to public sector giant ONGC. The other two partners in the block were Geo-Global Resources and Jubilant Offshore Drilling Pvt Ltd holding 10 per cent participating interest each.

The asset has always been seen as one close to Prime Minister Narendra Modi’s heart, as the discovery was announced by him during his stint as the Gujarat Chief Minister.

Allegations were also made on inflated gas reserves projections made by the company then.

Multiple sources associated with the developments told BusinessLine that a memorandum of understanding has been worked out between Geo-Global and GSPC and the nuances are being worked out for the transfer.

Asked why did GSPC exit the block, when it had to re-enter, sources in the know said, “parallel discussions with the minority partner was going, but was not concluded. GSPC always wanted to be part of the asset.”

On the cost of transaction, officials said that GSPC has been hand-holding Geo-Global in the project, and therefore, the deal will be technically at zero cost, as the outstandings that Geo-Global had will form part of the sell out.

Once GSPC and Geo-Global conclude the transfer, they will need to approach the Directorate General of Hydrocarbons for regulatory approvals.

Subsequent to the DGH nod, the production sharing contract will need to be re-inked with ONGC and Jubilant.

“The entire process need not take more than three months,” an official said.

The Comptroller & Auditor General of India in March last year had pulled up the State government, promoter of GSPC, for heavy outstanding against — Geo-Global and Jubilant.

The CAG had observed that outstanding amount as on March 31, 2015, stood at ₹ 1,734.60 against Geo-Global Resources alone. In May 2016, the then Gujarat Energy Minister Saurabh Patel had clarified that once the company begins commercial production, the pending recovery of ₹2,319.43 crore from the JV partners will be made.

ONGC, which has acquired the majority stake from GSPC, was clear that it will not be taking the later’s debt and that the deal valuation remained the same.

Meanwhile, the DGH expects ONGC, now the operator of the block, to work on the already approved field development plan.