Whiff of gas in Bay of Bengal

New Delhi, May 11: An Indo-Russian consortium has struck gas in an offshore block in the Bay of Bengal.

GAIL (India) Limited and Russian major Gazprom are now trying to ascertain whether the discovery is large enough for commercial use.

“The results of the production tests should come within this month and it would be clear whether the find is big enough to be termed commercial,” a senior GAIL official told The Telegraph.

GAIL and Gazprom have drilled two wells in the block. The first well did not yield any gas. The duo holds a 50:50 stake in the block and has invested Rs 900 crore. They are sharing the development costs equally.

The two companies bagged the rights to the block in 2000 in the first round of the new exploration licensing policy. In October that year, the companies signed a production sharing contract for the block which has an area of 7,779 square kilometres. The block — NEC-OSN-97/1 — is 120km from Haldia.

While the geological data and a Gazprom survey indicated a huge gas reserve in the block, the yield from the first well disappointed the companies.

To add to the woes, a shortage of drilling rigs has slowed the pace of exploration. These rigs are hired from the international market.

The slow pace of work and the failure to strike oil or gas in the first instance have discouraged Gazprom from taking a larger exposure in the country’s oil and gas exploration business.

With better opportunities in Russia and a proven hydrocarbon potential in Iran, where it has a strong presence, Gazprom did not find it worthwhile to invest in a big way in India during the subsequent rounds of oil hunt.

The new find is expected to renew Gazprom’s interest in India.

GAIL posted a 3 per cent increase in net profit at Rs 2,387 crore for the financial year ended March 31, 2007.