ONGC plans to farm out 35-45 per cent stake in each of the four CBM blocks —Jharia and Bokaro blocks in Jharkhand and North Karanpura and South Karanpura assets in Raniganj, West Bengal. "We have discussed the proposals received from various players. We would be awarding between 35-45 per cent stake to players who are experienced in the field of CBM," said the executive, requesting anonymity.
CBM is natural gas trapped within coal formations and commercially unviable for mining. It is extracted by drilling holes into the seams. ONGC has been wanting to move out of the CBM business and focus on conventional oil and gas exploration and production. Last July, forced by the ministry of petroleum and natural gas, ONGC had to cancel its earlier bid for farming out the blocks and invite fresh bids from international players, too, in November. However, it received bids only from three players.
Finding it tough to resolve land acquisition issues and the cycle speed of rigs, ONGC wanted to bring a joint operator and thus sell stake. So far, ONGC has spent about Rs 510 crore on the four blocks, which the winning bidder might have to pay in proportion to the stake.
ONGC is selling stake in one block to two players. "We already have two partners in the blocks who do not know much about CBM exploration. So, we would want to bring in an experienced partner," another senior official at ONGC added, also on condition of anonymity.
ONGC is the operator in the Raniganj north block, with a 74 per cent stake, while state-run miner Coal India Ltd (CIL) holds the remaining stake. At Jharia, it holds a 90 per cent stake, while CIL has 10 per cent. At Bokaro and north Karanpura, too, it is the operator, with 80 per cent each. In these blocks, state-run oil marketing firm IndianOil Corp Ltd holds the remaining stakes.
According to ONGC estimates, the Jharia block holds 85 billion cubic metres (bcm) of gas reserves. North Karanpura holds 62 bcm, Bokaro holds 45 bcm and Raniganj North holds 43 bcm.