The Hindu Business Line : ONGC in talks with SAIL to supply coal-bed methane

Damodar Valley Corporation is likely to emerge as a major customer while SAIL too is believed to be interested in using the gas in its steel plant at Bokaro.

ONGC is currently negotiating with SAIL in this regard.Bokaro Steel Plant, according to sources in SAIL, consumed nearly 4.2 million tonnes (m.t.) of coking coal in 2003-04, which is likely to rise to 4.6 m.t. in the current fiscal.

SAIL is exploring options to reduce the dependence on coking coal and, as a first step, has entered into an agreement with GAIL (India) for supply of 1.067 million metric standard cubic metre (MMSCMD) natural gas per day to Bokaro by 2006-07.

As CBM, cheaper than natural gas, will be produced in the nearby coal belt, SAIL is considering using the same for both blast furnace operations and captive power generation. "If gas is made available to us, we will try to make optimum use of it," said SAIL sources.

ONGC has a total of nine CBM exploration blocks - five in Jharkhand and one each in Bengal, Madhya Pradesh, Maharashtra and Gujarat.

The company proposes to start commercial production at Jharia block in 2006-07 through a consortium with Coal India Ltd (CIL) holding 10 per cent stake.

ONGC has identified recoverable CBM reserve in Jharia. The company recently commenced exploratory drilling at Bokaro block through a joint venture with IOC.

It is also mulling a joint venture with CIL for launching an underground coal gassification project. A MoU on this likely to be signed shortly. ONGC and CIL will have equal partnership in the project.

However, CIL will initially pick up 10 per cent stake in the joint venture and will monetise the remaining 40 per cent stake through transfer of its mining assets at a later date.

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