Oil and Natural Gas Corporation (ONGC) will soon call for international bidding to farm out stake in four of its coal-bed methane blocks.
ONGC which had this July, decided to farm out 35% stake in its CBM blocks to -- UK-listed Great Eastern Energy Corporation (GEECL), Brisbane-based Dart Energy, and Essar Energy and a consortium of Jindal Steel and Deep Industries -- had to revoke its decision after the Ministry of Petroleum and Natural Gas asked it to cancel the bidding.
Confirming the development, Sudhir Vasudeva, Chairman, ONGC told Business Standard, the company will be shortly calling for international bids. Companies which had bid earlier confirmed they have received letters from ONGC seeking expression of interest for re-bidding.
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 mining.
"We are not too sure if we would participate this time round. This is frustrating. We have already bid and other parties would know our quotes. What is the point in re-bidding?," asked the CEO of one of the bidding companies.
ONGC has been facing concern, as it has not been able to resolve land acquisition woes, the cycle speed of rigs, etc. In June, the company had decided to farm out 35% stake in four of its CBM blocks - in Jharia, Bokaro, north Karanpura and south Karanpura - in Jharkhand and Raniganj in West Bengal.
ONGC is the operator in the Raniganj north block, with 74% stake, while Coal India holds the remaining stake. At Jharia, it holds 90% stake, while CIL holds 10%.
At Bokaro and north Karanpura, too, it is the operator, with 80%. In these blocks, IndianOil Corporation holds the remaining stake.
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 holds 43 billion cubic metres of gas reserves.
Currently, ONGC has incidental production of 8,000-10,000 million standard cubic metres per day (mscmd) from the Jharia block.
Planned investment for the blocks is Rs 5,000 crore. Production from the blocks would increase 600-fold to six mscmd in 10 years.
The company has maintained since it was isolated at these standalone blocks, it faced many concerns and, therefore, wanted to bring in a joint operator. So far, ONGC has spent about Rs 510 crore on the four CBM blocks, which the winning bidder might have to cough up in proportion to his stake.
