The London Stock Exchange-listed Great Eastern Energy Corporation (GEECL), the first coal-bed methane (CBM) producer in the country, said free marketing and pricing are essential for developing the domestic oil and gas business.
Chief Executive Prashant Modi says though the allotment policy governing the sector is good and had not landed in a mess like what had been witnessed in the coal sector, it is important the government does not fix prices or customers to attract investment in the sector.
Currently, for natural gas, the government fixes price and customers for producers that have blocks under the New Exploration and Licensing Policy. Neither the price nor the utilisation policy, however, applies to CBM.
Modi told Business Standard, "It is important to have arms-length pricing. If the price is right, customers will buy the product and the government will get tax revenue but a government-set utilisation policy kills the market."
GEECL (West Bengal) sells (CBM) from its Raniganj field at a wellhead price of $7 a million British thermal units (mBtu). Compression and transportation charges are levied above this. It is currently producing 15 million cubic feet a day of CBM.
The company, which also has a CBM block in Tamil Nadu, is involved in arbitration with the government on cancellation of the award for a block, MG-CBM-2008/IV. The block was allotted to the Y K Modi-promoted company under the fourth round of CBM in 2010.
Modi said they were focused on the CBM business in India and looking forward to more blocks being auctioned, since other companies had relinquished 15-20. "If some of these are put up for bidding again, we would be interested. Our priority will be India but we will also look for business in Africa and Indonesia," he said. For Raniganj, the company has drilled 156 wells at a total investment of Rs 1,600 crore.
Of these, 108 are producing. It is looking at drilling another 144 to add 30-35 million cubic feet production. This would require further investment of Rs 1,400-1,500 crore over the next four to five years. Modi said over the past decade, the in-place gas reserves at the Raniganj block had doubled to 2.6 trillion cubic feet. Currently, the company is selling to 30-35 customers in the vicinity.
A portion also being sold as compressed natural gas to auto rickshaws and light commercial vehicles.
DRILLING FOR PROFIT
CEO Prashant Modi said the company would be interested in more blocks being auctioned
The firm will also look for business in Africa and Indonesia
- It plans to drill another 144 wells in Raniganj to add 30-35 mcf production. This would require Rs 1,400 cr over 4-5 years