ONGC to invest Rs 5,000 cr in 4 coal bed methane blocks

Oil and Natural Gas Corporation (ONGC) will explore four of its coal bed methane blocks on its own. This will require an investment of Rs 5,000 crore.

D K Sarraf, chairman and managing director, said, “We have decided to expedite development in our CBM blocks. CBM does not require technology or expert knowledge. We were in this business and our team is familiar with exploration plans”.

ONGC has so far spent Rs 510 crore on the four blocks.

“We will start development, but if anyone wishes to partner us we will be happy. Besides, after production is visible, we might get a better price from prospective partners,” Sarraf added.

ONGC twice in the past tried selling stakes in the four blocks in Jharia, Bokaro and North Karanpura in Jharkhand and Raniganj North in West Bengal.

In 2012, after ONGC first sold stakes in these blocks, it was told 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, Brisbane-listed Dart Energy, which had been awarded 10-25 per cent stakes in the four ONGC blocks, decided to surrender there citing tough business conditions in India.

ONGC cancelled its sale of a 25 per cent stake in the Raniganj North block to Great Eastern Energy.

ONGC is operator of the Raniganj North block with a 74 per cent stake and Coal India Ltd holds the rest. In Jharia, ONGC holds 90 per cent and Coal India Ltd (CIL) 10 per cent.

In Bokaro and North Karanpura, ONGC is the operator, with 80 per cent holding, and Indian Oil Corporation holds the other 20 per cent. ONGC estimates the Jharia block holds 85 billion cubic metres of gas reserves, North Karanpura 62 billion cubic metres, Bokaro 45 billion cubic metres and Raniganj North 43 billion cubic metres.

ONGC has some of the most prolific CBM blocks in the country, but the company has failed to monetise them.

Reliance Industries plans to begin production from its CBM blocks by the second quarter of 2015-16. Essar Oil produces 0.5 million standard cubic metres per day of CBM gas.

ONGC sells CBM gas from wells at Parbatpur in the Jharia block at an approved price of $5.1 per million British thermal units.