Essar Oil’s coal-bed methane block at Raniganj in West Bengal, slated to begin production by December, has had its gas reserve estimates raised from 42 billion cubic meters to 60.77 billion cubic metre by the Directorate-General of Hydrocarbons.
“Essar has invested around Rs 150 crore in the Raniganj block, though the project will see an overall investment of approximately Rs 1,500-1,750 crore. The net cash spend is likely to be around 35 per cent of that amount, as the project will start generating revenues by December. We will approach banks to raise debt by November-end to fund this project,” said Shishir Agrawal, CEO and executive director of Essar Exploration and Production, a unit of Essar Oil.
The company would raise about Rs 750 crore in the first transaction. “We will be submitting a development plan to the government next month for drilling 500 wells over the next five years,” he added. The approval is expected in two to three months.
Raniganj is the country’s oldest coal-mining zone. The block is 150 km from Kolkata, near the steel city of Durgapur, in Bardhman district.
About 50 per cent of the gas discovered is commercially recoverable, said Agrawal. The company plans to cater to areas in and around Durgapur.
The projected demand for gas within a 150 km radius of the block was around 18 million metric standard cubic metres a day (mmscmd), expected to increase to 50 mmscmd by 2017.