ONGC CBM Blocks Stake Sale by Year End

Oil and natural gas Corporation (ONGC) will be able to award its coal-bed methane (CBM) blocks to interested bidders in little over a month.

Business Standard has reported, citing a senior official with the company, that domestic and international companies had shown interest and it was working on legal issues for the farming out of a 35 per cent stake in the blocks, including whether or not to split the 35 per cent between two parties or not, and how much.

A decision was likely by year-end.

"Certain legal angles need to be looked into. The participation interest we would be allotting to interested parties needs to be looked into in detail. We are discussing if the share should be split, between 25 and 10 (per cent) or 17 and 18," the official was quoted as saying.

ONGC holds four CBM blocks in Jharia, Bokaro, north and south Karanpura - in Jharkhand and Raniganj in West Bengal. It is the operator in the Raniganj north block, with 74 per cent stake, while Coal India holds the rest. At Jharia, it holds 90 per cent stake and CIL 10 per cent. At Bokaro and north Karanpura, too, it is the operator, with 80 per cent. In these blocks, Indian Oil Corporation holds the remaining stake.

Production from the blocks is slated to rise 600-fold to six million standard cubic metres a day (mscmd) in 10 years. The company has maintained it needs to bring in a joint operator.

According to ONGC estimates, the Jharia block holds about 85 billion cubic metres of gas reserves. North Karanpura has 62 bn, Bokaro holds 45 bn and Raniganj North 43 bn. Currently, ONGC produces 8,000-10,000 mscmd from the Jharia block.