ONGC's CBM Block Farm Out Attempt May take Time

ONGC’s attempt to move out of coal bed methane business may take some time after Ministry of Petroleum and Natural Gas directive to cancel bidding for farming out CBM blocks. The company would now opt for international bids.

Business Standard reports that Great Eastern Energy Corporation (GEECL), Dart Energy, and Essar Energy, which had earlier bid for the stake, may not participate in the re-bid. These companies, which are upset at the ministry’s intervention in the matter, told Business Standard re-bidding might be another long-drawn process, and they may run out of patience.

“So far, we have not been informed of this re-bid and our information is only through the media. If it is true, it will tantamount to a waste of our time. In our view, there should be no re-bidding and they should decide, based on the current bids submitted and the credibility of the bidders, to begin production at the blocks at the earliest,” said Yogendra Kumar Modi, chairman and managing director, GEECL.

“Given the recent discussion in the public arena on CBM pricing, they (ONGC) may anticipate a different level of interest. Some who were interested before, may not be interested now,” Business Standard quoted a spokesman from Essar Oil as saying.

In June, the company had decided to farm out 35 per cent stake in four of its CBM blocks — in Jharia, Bokaro, north Karanpura and south Karanpura — in Jharkhand and Raniganj in West Bengal.

The companies say calling for international bids may take a year. This means ONGC, which has been scouting for farm-in opportunities for faster exploitation of CBM resources, would have to wait longer to sell stake in the four blocks.