ONGC to decide on stake sale in CBM blocks by month-end
State-run Oil and Natural Gas Corporation (ONGC) is to shortly sell stake in its four coal-bed methane (CBM) blocks to companies which have bid for this.
"We are evaluating the bids we have received. We could give out up to 30 per cent stake and look at joint operatorship of the blocks. This could be on the lines of our Panna-Mukta-Tapti model. Details of revenue share are also being worked out," Sudhir Vasudeva, chairman and managing director, told Business Standard. He said their board of directors would decide at a meeting towards the end of this month.
At its CBM blocks, ONGC has been facing various issues such as not being able to manage land acquisition issues and the the cycle speed of rigs, among others. "We are isolated at these blocks, as these are standalone ones. Clearly, there are issues and we want to bring in a player who could be a joint operator," said an ONGC board member.
Great Eastern Energy Corporation Ltd listed in Britain, and Brisbane-based Dart Energy, in addition to Essar Energy, have bid for the stake. ONGC holds the four CBM blocks in Jharia, Bokaro, Karanpura and Raniganj.
ONGC is said to have spent Rs 510 crore on these four locks. At Raniganj, it is the operator with 74 per cent stake. Coal India holds the other 26 per cent. At Jharia, it holds 90 per cent stake and Coal India the rest. At Bokaro and Karanpura, it is also the operator with 80 per cent. IndianOil Corporation holds the remaining stake.
"They may be giving us operatorship in their blocks. So, when we develop the blocks, we will invest according to our respective shareholding. There will, however, be certain rights attached to the deal," said the chairman of one of the bidding companies.
ONGC estimates its Jharia block holds around 85 billion cubic metres of gas reserve, Karanpura 62 bn, Bokaro 45 bn and Raniganj 43 bn cu mtrs.
CBM is natural gas, trapped within coal formations. The gas is extracted by drilling holes into the seams that contain gas and are commercially unviable for coal mining. The government has so far held four rounds of bidding for CBM blocks and awarded 33 contracts.