The Telegraph
Since 1st March, 1999
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Three-way deal for coal-bed methane soon

Calcutta, Feb. 16: Oil and Natural Gas Corporation (ONGC), the largest oil and gas exploration company in the country, is planning to tie up with Coal India Ltd and National Thermal Power Corporation (NTPC) to venture into coal-bed methane (CBM) production.

ONGC sources said the company and CIL have already signed a contract with the ministry of petroleum and natural gas earlier this month for the exploration and production of two coal-bed methane blocks. The two public sector majors have also paid Rs 2.85 crore as contract money to the government, they added.

The two blocks where ONGC is very optimistic about striking coal-bed methane are in Jharia and Ranigunj.

With these two deals, the government has altogether signed eight contracts with the two major public sector companies over the past few months for the exploration and production of coal-bed methane, sources said.

“So far our new businesses are concerned, we are very optimistic about coal-bed methane. It will take some time to ascertain what kind of volume we get from the fields and the viability of the whole project,” a senior ONGC executive said.

The eight blocks that ONGC has got through the process of bidding is spread over three states. While three blocks belong to Jharkhand, two are in Madhya Pradesh and three in West Bengal.

The ONGC executive said that once the potential of these fields is evaluated, India would be the fourth country in the world to have a successful CBM venture. The other countries are the US, Australia and China where CBM has already proved to be a very potential business.

According to a conservative estimate, the eight blocks will produce around 400 billion cubic metres of gas in the next few years. The volume is certain to offset the scarcity of gases in the country to a large extent.

Asked what kind of investment the consortium needs to make the fields operational, the ONGC executive said around Rs 250 crore is likely to be spent in the next three to four years.

The official, who is looking after the project, refused to comment on whether a separate joint venture is likely to be formed for the project. “Both NTPC and CIL have approached us for forming the joint venture. But we think our first task is to find out the viability of the project. If the project is viable, the formation of joint venture will take very little time to be completed,” he said.

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