JSPL, Aussie firm bag stakes in ONGC blocks

In addition to UK-listed Great Eastern Energy, Brisbane, Australia-based Dart Energy and a consortium of Jindal Steel and Power and Deep Industries have won bids for four coal bed methane (CBM) gas blocks of Oil and Natural Gas Corporation (ONGC).

ONGC has sold stakes in every block to two players. When asked for a confirmation, an ONGC spokesperson declined to comment.

While Great Eastern Energy won 25 per cent stake in the Raniganj CBM block, Dart Energy won 10 per cent in Raniganj and 25 per cent in the Bokaro and North Karanpura Blocks. Jindal Steel and Deep Industries won 10 and 25 per cent stakes in the North Karanpura and Bokaro blocks, respectively, sources said.

An executive in one of the companies said: “Investment details in the block would be finalised at a later stage. First, we need to seek various approvals. This may take almost a year,” he said.

As it was difficult for ONGC to resolve land acquisition issues and the cycle speed of rigs, last year, the company decided to opt for joint operators in the blocks, by farming out 35-45 per cent stakes in each of the four CBM blocks—Jharia and Bokaro blocks in Jharkhand and North Karanpura and South Karanpura assets in Raniganj, West Bengal. So far, ONGC has spent about Rs 510 crore on the four blocks, which the winning bidder might have to pay, in proportion to its stake.

With 74 per cent stake, ONGC is the operator in the Raniganj north block, while Coal India Limited (CIL) holds the rest. At Jharia, ONGC holds 90 per cent stake, while CIL has 10 per cent. At Bokaro and north Karanpura, too, ONGC is the operator, with 80 per cent stake each. In these blocks, IndianOil Corp holds the remaining stakes. “We already have two partners in the blocks who do not know much about CBM exploration. So, we would want to bring in an experienced partner,” said a senior ONGC executive, on condition of anonymity.

According to ONGC estimates, the Jharia block holds 85 billion cubic metres (bcm) of gas reserves. While North Karanpura holds 62 bcm, Bokaro holds 45 bcm and Raniganj North holds 43 bcm.

CBM is natural gas trapped within coal formations and commercially unviable for mining. It is extracted by drilling holes into the seams.