Mumbai: After failing to get private partners to develop four of its coal bed methane (CBM) blocks twice, Oil and Natural Gas Corporation has now decided to go ahead and explore these blocks on its own at an investment of Rs 5,000 crore.
D K Sarraf, chairman and managing director ONGC said, “We have decided to expedite development in our CBM blocks. CBM does not require much of technology or expert knowledge. Since we were in this business, our team is familiar with the exploration plans.”
The company said that it has spent about Rs 510 crore on the four CBM blocks so far.
Sarraf, however, added that if going forward, it finds companies who are interested in an partnership, it would look at options.
“We will start our development but in future if anyone wishes to partner us, we will be happy. Besides, after production is more visible, we may get better price from prospective partners.”
ONGC has twice in the past tried selling stake in four of its CBM assets. ONGC holds some prolific CBM blocks in Jharia, Bokaro and North Karanpura in Jharkhand and Raniganj in West Bengal.
In 2012, after ONGC first sold 10-25% stake in these blocks, it was forced by the petroleum ministry to cancel the bids and go for international bidding. Later that year, it went for a re-bid and, in 2013, allotted stakes in the blocks.
But in 2014, the Brisbane-listed Dart Energy, which had been awarded 10-25% stake in four ONGC blocks, decided to surrender the stake, citing the tough conditions of doing business in India.
In the case of Great Eastern Energy Corp, to which ONGC had divested 25% stake in the Ranigunj CBM block, ONGC cancelled the agreement.
For the Raniganj north block, ONGC is the operator, with 74% stake; Coal India Ltd (CIL) holds the rest of the stake. In the case of Jharia, ONGC holds 90%, while CIL holds 10%. For the Bokaro and north Karanpura blocks, too, ONGC is the operator, with 80%; Indian Oil Corporation holds the remaining stake in these blocks.
According to ONGC estimates, the Jharia block holds about 85 billion cubic metres of gas reserves. While the north Karanpura block holds 62 billion cubic metres, Bokaro holds 45 billion cubic metres and Raniganj north 43 billion cubic metres.
ONGC has one of the most prolific CBM blocks in the country, but the company has failed to monetise it so far. Reliance Industries and Essar Oil have beaten ONGC in this segment, so far. While RIL has completed land acquisition for Phase I wells and detailed engineering and procurement for sub-surface and surface facilities, installation and erection of most of the equipment’s is nearing completion. RIL plans to begin production from its CBM blocks by second quarter this fiscal.
Essar Oil on the other hand produced 0.5 million standard cubic metres per day of CBM gas, making it India’s largest CBM gas producer.
ONGC sells CBM gas from existing wells at Parbatpur in the Jharia block at an approved price of $5.1/million British thermal units.
