New Delhi: Gujarat State Petroleum Corp. Ltd (GSPC) plans to sell its stakes in some of its hydrocarbon blocks and may appoint SBI Capital Markets Ltd to find buyers.

GSPC plans to sell stakes in its so-called marginal fields that have not been exploited. These onshore hydrocarbon blocks are in the exploration stage. GSPC, which is also among the largest gas trading companies in the country, has 34 blocks in its portfolio both onshore and offshore. Of these, 15 are in the exploration phase.

This comes in the backdrop of waning investor interest in the Indian hydrocarbon sector, with around 70% of Indian basins remaining largely under-explored.

“GSPC plans to sell stakes in its blocks. SBI Caps will be the transaction adviser for the same," said a person aware of the development requesting anonymity.

“We are in the process of engaging a transaction adviser for these marginal blocks which are less than 15 and are in the exploration stage. The marginal blocks are onshore where we believe that others can add value. We don’t want to spare our manpower and efforts on that. We are not exiting any of our major blocks. This an exercise of rearranging our portfolio," confirmed a senior GSPC official, requesting anonymity as the plan is still in the early stages.

GSPCs portfolio includes the Deen Dayal field in the Krishna-Godavari basin, the country’s largest reservoir of gas. GSPC has spent 13,469.51 crore till December on exploration, with commercial production yet to begin. According to India’s Directorate General of Hydrocarbons (DGH), the Krishna-Godavari basin is an established hydrocarbon province with a resource base of 1,130 million tonnes (mt), of which 555 mt is assessed for the offshore region.

The response to the New Exploration Licensing Policy (Nelp) has been tepid. India approved Nelp in 1997—it took effect in January 1999—to boost hydrocarbon exploration. Under Nelp, the government allocates rights to explore hydrocarbon blocks through a bidding process and has done this in nine phases so far for 360 blocks, with an investment of around $21.3 billion. Hydrocarbon explorers in India have made a total payment of $15.41 billion to the Union government as royalties and cess, and $1.93 billion to state governments since 1994.

“GSPC wants to be out of blocks where value can be made," said the first person cited above.

While an SBI Capital Markets spokesperson declined to comment, queries emailed to India’s petroleum ministry remained unanswered till press time.

This comes in the backdrop of crude oil prices in the Indian energy basket falling below $50 per barrel. Crude oil prices for the current financial year averaged $59.07, $63.82, $61.75 and $56.30 per barrel in April, May, June and July, respectively, with the price for the last fortnight averaging at $55.15. Crude oil prices in the Indian energy basket averaged at $84.16, $105.52, $107.97 and $111.89 in 2014-15, 2013-14, 2012-13 and 2011-12, respectively.

The depressed price scenario is expected to continue, according to US Energy Information Administration (EIA).

“Amid high uncertainty in the global oil market, EIA has lowered crude oil price forecasts in the Short-Term Energy Outlook (STEO), expecting West Texas Intermediate (WTI) crude oil prices to average $49 per barrel (b) in 2015 and $54/b in 2016, $6/b and $8/b lower than forecast in last month’s STEO, respectively. Concerns over the pace of economic growth in emerging markets, continuing (albeit slowing) supply growth, increases in global liquids inventories, and the possibility of increasing volumes of Iranian crude oil entering the market contributed to the changed forecast," EIA said in a statement on Wednesday.

GSPC’s plans also comes at a time when the government intends to shortly announce premium pricing on new discoveries in difficult areas, allowing the explorers to charge a premium over and above the price formula approved by the government in October last year.

“The main reason for lower crude oil and gas production is due to natural decline in production from the ageing fields of ONGC (Oil and Natural Gas Corp. Ltd) and OIL (Oil India Ltd). In addition, there was lower natural gas production from the Krishna-Godavari basin," petroleum minister Dharmendra Pradhan told the Rajya Sabha in a statement on 5 August.

“Bring into production new discoveries at the earliest. For this a policy framework for early monetization of hydrocarbon discoveries under PSC (production sharing contract) regime has been approved by the government," Pradhan added.

Petroleum product consumption in India has been growing. According to the oil ministry, it grew 3.14% to around 163.17 mt in 2014-15. India’s energy demand is expected to more than double by 2035, from less than 700 million tonnes of oil equivalent (mtoe) now to around 1,500 mtoe, according to the oil ministry’s estimates.