ONGC sells three CBM gas blocks at $5.77-6.12 /MMBtu
New Delhi: State-owned Oil and Natural Gas Corp (ONGC) has sold natural gas from three coal-bed methane (CBM) blocks in Jharkhand for a price ranging between $5.77 per million British thermal unit to $6.12 per MMBtu.
ONGC sold gas from its Bokaro CBM block to a private industry, H N Roy, for $5.77 per MMBtu on a gross calorific value basis, sources with direct knowledge of the development said. State gas utility GAIL India Ltd will buy gas found below coal-seams in the North Karanpura block at $5.56 per MMBtu while private sector Positron Energy Pvt Ltd would offtake gas from Jharia CBM block at $6.12 per MMBtu.
ONGC is to start production from the three blocks by next month with the peak volumes touching 3 million standard cubic meters per day.
Sources said the company has already drilled six wells on Bokaro block and the 7th well was in progress. A total of 30 wells are planned to be drilled during 2018-19.
Drilling in North Karanpur started this month and 30 wells are planned on the block before March 31, 2019, they said.
The price realised by ONGC is less than the rate at which Essar Oil has sold its entire production of coal-seam gas or CBM from a West Bengal block to state-owned GAIL India Ltd. GAIL in February bought 2.3 million standard cubic metres per day of coal-bed methane (CBM) that Essar Oil and Gas Exploration and Production (EOGEPL) will produce from its Raniganj block in West Bengal for $7.1 per million British thermal unit.
The rate is more than double of the $3.06 per MMBtu price set by the government for most of the domestically produced conventional natural gas.
Essar had used the same formula which Reliance Industries had first used in 2012 to seek bids for its CBM gas from its Sohgpur block in Madhya Pradesh, and then again last year for selling the CBM. In the first instance, the oil ministry had not approved the price.
RIL's Sohagpur gas at Sunday's oil price comes to $7.15 per MMBtu on GCV basis.
The formula used by RIL and Essar is the same at which Petronet LNG, a joint venture of public oil companies, whose chairman is the oil secretary, used to import long-term liquefied natural gas (LNG) from Qatar. Sources said gas from North Karanpura is due to flow from July but GAIL has sought an extension of gas offtake up to December to complete pipelines for evacuation. ONGC is, however, insisting that GAIL honour its commitment to lift gas from July by using truck-mounted cascades.