India's Essar, Gail Sign CBM Supply Deal
Indian private sector coalbed methane (CBM) explorer Essar Oil & Gas Exploration & Production (EOGEPL) has signed an agreement with state-owned Gail to supply gas from its flagship Raniganj East block in eastern India, Essar said August 9.
As per the 15-year agreement, EOGEPL will sell its entire CBM production of 2.3mn m3/d from the Raniganj East block at a “globally competitive price.” It did not say at what price it will supply the gas.
“The signing of this agreement is mutually beneficial and is a major step in our efforts to expand our business. This is in line with the government’s vision of moving towards a gas-based economy, thus fuelling development. Downstream consumers within Gail’s network, such as gas-based industries and households, stand to benefit from this assured supply of gas,” EOGEPL CEO Vilas Tawde said.
The company said it will now be focussing on ramping up production from its existing 348 CBM wells and the 150 wells it intends to drill in the future in the block. It is also looking at shale gas exploration, that exist in the EOGEPL portfolio. Last week, the Indian cabinet allowed oil and gas exploration companies to explore for unconventional hydrocarbons like shale gas and coalbed methane (CBM) under their existing contracts. Previously, existing contractors were not allowed to explore and exploit CBM or other unconventional hydrocarbons in already allotted licensed/leased area. Similarly, CBM contractors were not allowed to exploit any other hydrocarbon except CBM.
EOGEPL said it has appointed international consultants to study its assets and is keen to go ahead with extensive and structured exploration to development programmes across these assets.
The company has already invested more than rupees 40bn ($583mn) in the Raniganj East CBM block towards drilling wells, setting up supply infrastructure, and laying customer pipelines to Durgapur and nearby industrial areas. The Raniganj East block has achieved gas production of more than 1mn m3/d, which will be gradually scaled to 2.3mn m3/d, it said.