CBM project in Gujarat to have third partner

Move comes in the wake of slow progress by ONGC.

Miffed at the slow pace of exploration work in a coal-bed methane (CBM) block in Gujarat by ONGC, the state government has requested the Centre to induct an additional partner to speed up the project.

Following representations from the state government, the Centre has granted the permission to have a third partner in the block.

The CBM block, located in Banaskantha district of Gujarat, was awarded to the Gujarat State Petroleum Corporation (GSPC)-ONGC consortium in February 2004 under the CBM second round of bidding.

"The ONGC will not be able to reach the drilling target during the phase-I of exploration. In order to meet the future demand for gas, concerted efforts are to be made to increase the domestic gas production. ONGC should be asked to induct a third partner so that drilling and production activity in the CBM block could be expedited," says a letter written by the state government to the Centre.

Currently, GSPC has 30 per cent stake in the production sharing contract (PSC), while ONGC holds the rest.

According to the PSC, ONGC has committed to drill 8 core holes before September 2006.

"However, the progress of core hole drilling has been very slow. ONGC is unable to reach the target finalised during the phase-I of exploration. In case ONGC is not in a position to carry out this work within the stipulated time, it should induct a third partner as an operator to expedite the core hole drilling and production activity," said a senior official. The state government has written the same to the Union ministry of petroleum and natural gas.

ONGC, on the other hand, has communicated to the Director General of Hydrocarbons (DGH) that the search for the third operator was on. However, no player has been identified for the purpose so far.

It may be noted that samples extracted by Essar Oil in north Gujarat were sent to a lab in the US, which confirmed presence of huge CBM reserves under the coal in the region.

Subsequently, the state government notified the region, which led to difference of opinion with the Centre. The ministry had excluded Gujarat CBM block in the 1998 bidding. However, it was included in the NELP II.