Great Eastern Energy Corporation Ltd (GEECL), the country’s first company to commercially produce coal bed methane (CBM), plans to bid for one of Oil and Natural Gas Corporation’s (ONGC) CBM blocks in eastern India.
It also wants to raise fresh funds by offloading up to 10 per cent of its shares through an initial public offer in 2013.
The company is producing 0.22 million standard cubic metres a day (mscmd) and is expected to reach three mscmd by 2016-17 from the CBM block in Raniganj, West Bengal.
CBM is natural gas, trapped within coal formations. The gas is extracted by drilling holes into the seams that contain gas and are commercially unviable for coal mining. The government has so far held four rounds of bidding for CBM blocks and awarded 33 contracts.
| ON TARGET |
| * GEECL has drilled 100 wells |
| * Plans to drill 200 more over the next few years at an investment of Rs 2,500 crore |
| * It is supplying gas to commercial entities in Asansol, Durgapur and adjoining cities |
“We look forward to listing at stock exchanges in India in a year to raise money, since the CBM project is capital-intensive. One good thing is that the (Raniganj) block has started giving us profits and valuation will be improving with rising production and profit,” said Y K Modi, chairman and chief executive officer of GEECL.
The company is already listed at the London Stock Exchange, with market capitalisation of £366 million (Rs 2,840 crore).
Modi said the company had drilled 100 wells, investing Rs 1,000 crore, and would be drilling 200 more over the next few years at an investment of Rs 2,500 crore. It is supplying gas to commercial entities in Asansol, Durgapur and adjoining cities.
GEECL has also signed a franchise agreement with Indian Oil Corporation (IOC) and Bharat Petroleum Corporation to set up CNG dispensing stations at their outlets in the region.
The price of CBM gas, unlike gas produced from blocks under the New Exploration Licensing Policy, is currently market-driven, though the government is looking at putting some controls in place on price determination.
ONGC is looking for an experienced partner for its four CBM blocks — Raniganj, Bokaro, Jharia and Karanpura. It has 74-100 per cent stake in these, with partners such as Coal India and IOC, which have 10-26 per cent participating interest. Modi said they wanted to bid for the ONGC block.
In the fourth round of CBM bidding in 2010, GEECL won the Mannargudi block in east-central Tamil Nadu. The block covers 691 sq km. and the effective area for CBM operations is 667 sq km. It is estimated to hold 0.98 trillion cubic feet of gas.
