ONGC for state gassification project

Project, to be signed on Monday, may cost Rs 5,000 crore in four years

Integrated oil and gas company Oil and Natural Gas Corporation Ltd (ONGC) would sign a contract with the Skochinsky Institute of Mining (SIM) in Russia to set up an underground coal gassification (UCG) project in Gujarat on Monday.

In November ONGC had signed a memorandum of understanding with SIM, which is run by the National Mining Research Centre of Russia, to enter into the business of UCG.

The project, rated to be with the highest potential among all such prospective UCG projects earmarked by ONGC, would result in investment worth around Rs 5,000 crore in Gujarat in the next four years. It is believed that ONGC would make the most of the required investment.

The contract for the first phase of the gassification project would be signed between the director general of SIM, A V Izmalkov, and P K Hazarika, head of ONGC's UCG projects. ONGC's partnering company, Gujarat State Petroleum Corporation Ltd (GSPCL) chairman C K Koshy would also be present at the occasion.

Following a MoU signed between GSPCL and ONGC at the Global Investors' Summit held in Ahmedabad in September 2003, an initial survey was carried out to locate hidden coal between Patan town of Patan district and Tharad in Banaskantha district. The survey revealed a huge reserve of coal in the area.

"As GSPCL found it difficult extracting coal in the area, it sought the technical expertise of ONGC even as the corporation was looking for opportunities in the UCG sector. After a survey by experts from ONGC, it was decided to seek the help of experts from the National Mining Research Centre in Moscow," said a state government source.

However, a formal joint venture entity combining the stakes of ONGC and GSPCL would be formed shortly following which a clear decision on the investment pattern would be taken, said the source. On November 25 ONGC had inked a MoU with SIM for technical collaboration in UCG projects. According to the MoU, ONGC and SIM would come out with a detailed work plan on the UGC project in India, which includes the project in Gujarat.

An ONGC source said, "UCG is the process to convert the un-mineable underground coal or lignite into combustible gases by gassifying the coal where ever it is lying. In this chemical process coal is subjected to gassification agents like air, steam and oxygen, and the coal is converted from solid to a mixture of gases, liquids and also ash by heat and chemical reactions. Subsequently, the produced gases are a mix of combustible and non-combustible gases."

"The gases produced after such process could either be used as fuel gas and also for power generation, besides their possible usage as a feedstock for liquid fuels and petrochemicals."

"For coal reserves lying deeper in the soil, UCG is the only available technology and ONGC is planning to start commercial marketing of Syn-Gas produced this way in next three years of time," added the source.