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

ONGC is negotiating a gas purchase agreement with Steel Authority of India Ltd (SAIL) for supplies of coal bed methane (CBM) from the Bokaro reserves in Jharkhand. CBM is expected to replace SAIL's demand for coking coal primarily in Bokaro and Durgapur Steel Plant.

According to sources, SAIL is also exploring possibilities of equity participation in one or more of ONGC's CBM fields. ONGC had announced a 45.03-billion-cubic-metre CBM reserve potential over 95 sq. km in the Bokaro field in August.

The company is pursuing its exploration and (or) production plans in four other blocks in Jharkhand.

As per the new production plan, ONGC will be producing a minimum of 3 lakh cubic metres of CBM per day in three years. The first CBM flow is expected in 2007.

Confirming the news, sources in SAIL said the company is likely to place a firm demand proposal for CBM for its Bokaro Steel Plant next month.

It had already indicated that it is ready to consume the entire projected production of CBM in the next three years. "We are ready to consume as much as they produce," a senior SAIL official said.

According to sources, ONGC had projected an initial production of 0.5 cubic metres of CBM per day, which will replace merely one lakh tonnes of coking coal. This is against a total demand of roughly 4.5 million tonnes (mt) of coking coal at Bokaro Steel plant alone.

Apart from SAIL, a number of public and private sector players have expressed their interest for CBM supplies.

All the companies have been asked to place firm offers by the middle of next month.

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