The Hindu Business Line : ONGC may rope in BP, Arrow Energy as partners

Kolkata, Aug. 24 ONGC may rope in British Petroleum and Arrow Energy of Australia as joint venture partners for coal-bed-methane (CBM) exploration and development in India. BP and Arrow are global front-runners in CBM development.

While the discussions are still in its early stage, sources said that the proposals include joint participation in the forthcoming bidding round (CBM-IV) and equity-participation (by the foreign partners) in the existing CBM blocks operated by ONGC.

CBM Exploration

According to sources, both BP and Arrow have visited ONGC data room to take stock of the nature of blocks held by ONGC and the efforts taken to explore CBM so far.

Discussions have reportedly progressed with BP wherein both the companies have already entered into a knowledge-sharing pact. The companies (ONGC and BP) are now in the process of convening a series of roundtables to explore the experiences encountered in CBM exploration in India and the rest of the world so far. While officials of Arrow Energy could not be contacted, a BP official said, “We are open to exploring possibilities of increasing our presence in the CBM exploration in India.”

Bidding Round

Both the foreign majors participated in the last CBM bidding round. Arrow secured three blocks (one in Jharkhand and two in Chhattisgarh) in consortia with GAIL, EIG and Tata. The company focuses on developing CBM in Australia and Asia.

BP secured one block at Birbhum in West Bengal. The company is now expecting to enter into the final exploration pact with the State as well as the Union Government to start work in the block.

BP is a leader in CBM exploration and production in the US. The company operates or has equity interest in 2,700 wells producing 1.3 billion cubic ft a day (bcfd). The company claims to have pioneered CBM technology development and application resulting in 23 US patents.

ONGC is the operator of a total of nine blocks in India, secured either or nomination basis (before the advent of the bidding round) and during the first two bidding rounds.

Legal Hurdles

The company has also established presence of CBM reserves in two blocks—Jharia and Bokaro in Jharkhand. Development of the same, however, was delayed due to a series of complications including legal hurdles as well as problems in land acquisition.

ONGC previously entered into an umbrella agreement with Shell Global for co-operation in a host of areas including CBM. However, the agreement did not hold good in the following period and both the companies bid separately in CBM-III.