Gujarat State Petroleum Corporation (GSPC), a state-owned enterprise, said that it had found 20 trillion cubic feet of gas in the Krishna Godavari Basin, an area offshore of Andhra Pradesh state in the southeast of the sub-continent.

Narendra Modi, the state’s chief minister, hailed the find as of international significance, worth some $50 billion (£27 billion). But the Indian Oil Ministry played down the initial projections.

V.K. Sibal, the ministry’s hydrocarbons director, said: “They have made a rough calculation. A lot of work needs to be done. You can say the initial testing is very encouraging.”

India’s current gas reserves – 82 trillion cubic feet – are insufficient to meet soaring demand for fuel from power stations as well as buses and taxis that have converted to natural gas in India’s cities.

Shell recently built India’s second terminal to import liquefied natural gas and several import schemes are under way. Iran and India recently signed a deal to import five million tonnes per year from 2009. Another project, costed at $4 billion, to lay a pipeline linking Iran’s gasfields with India via Pakistan, has been dogged by the continued tensions between Pakistan and India over the disputed Himalayan territory of Kashmir.

Energy analysts yesterday questioned whether the new gas find could jeopardise further import schemes but India’s Oil Minister, Mani Shankar Aiyar, said that the proposed pipeline was “based on modest projections of economic growth”.

The GSPC find eclipses the 14 trillion cubic feet discovery, also in the Krishna Godavari Basin, in 2002 by Reliance Industries, India’s largest private energy and petrochemical company.

Located six kilometres offshore the well was drilled to a depth of five kilometres and the Oil Ministry described it as “a frontier well” in which high temperatures and pressures could pose problems. “There are bound to be problems. The equipment and measuring instruments will have some challenges,” Mr Sibal said.

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