Indian state-owned Oil and Natural Gas Corp. (ONGC) has been hit by news Dart Energy has surrendered it stake in the company’s coalbed methane (CBM) exploration project.
In June 2013, ONGC had offered a 10 – 25% stake in four of its CBM blocks to Dart. However, Dart Energy has cited tough conditions of doing business in India as a reason for its decision to exit the country and surrender its interests in the CBM blocks.
"In line with the group's re-focused strategy, it is seeking opportunities to farm-out and/or sell or exit all of its activities in India. In addition, the group had in the previous financial years submitted relinquishment requests in respect of three other licences which continued to be reviewed by the Indian government," Dart said in its annual report.
ONGC had been hopeful of making progress on the CBM blocks. In its 2013 – 14 annual report, the company said: "The development plans for all the four blocks have been submitted and approved by the steering committees. Nearly 400 wells and 2000 hydro-fracturing jobs would be carried out in the coming four-five years, as per timelines of the CBM contract. In view of the mammoth and time-bound task, ONGC has decided to farm-in experienced partners to execute field operations, the process for acquisition of which is in an advanced stage."
According to the Business Standard, Commercial CBM production in the ONGC blocks is yet to start. Dart was said to have a 25% interest in the Jharia, North Karanpura and Bokaro blocks in Jharkhand. It also won a 10% stake in the Raniganj block in West Bengal. In the latter, London-listed Great Eastern Energy Corp is Dart's partner, with 25% interest.
ONGC had last year decided to farm out stakes in its four CBM blocks, as it wanted to expedite production. It faced land acquisition and rig availability issues that have delayed production. It has so far spent Rs 510 crore on the four blocks and had in 2012 offered to give out up to 35% stake in these, through a tender. However, the ministry of petroleum and natural gas had asked the company to scrap the tender, as only three players made bids for the project.
According to ONGC estimates, the Jharia block holds 85 billion cubic metres (bcm) of in-place gas reserves. North Karanpura holds 62 billion m3, Bokaro 45 billion m3 and Raniganj North 43 billion m3. Of these, the company has established 76 billion m3 of in-place reserves.
Edited from various sources by Sam Dodson
Read the article online at: https://www.worldcoal.com/cbm/16092014/dart-energy-withdraws-from-indian-cbm-cbm114/