Anil Sasi

New Delhi, Sept 29

A CONSORTIUM led by the Rs 26,000-crore NTPC has bagged an oil and gas exploration block in Arunachal Pradesh. NTPC is firming up plans to extract oil from the block for selling it in the spot markets and using the revenue stream to purchase gas for its plants.

"The extraction cost of oil is only around $3-$5 per barrel. With crude prices soaring in the international spot markets and predicted to remain high, we can profit from the difference and use the funds for purchasing gas for our plants," said a senior NTPC official.

Since NTPC does not have an expertise in oil exploration, it had struck a three-way joint venture with Canoro Resources Ltd and GeoPetrol International while bidding for the block.

NTPC would hold 40 per cent stake in the venture.

The block has been awarded under the fifth round of the New Exploration Licensing Policy (NELP-V).

NTPC's plans to enter the oil sector come close on the heels of ONGC getting into the power sector. ONGC is setting up a 750 MW gas-based station in Tripura.

NTPC, the country's largest power producer, runs 20 thermal power stations, including seven gas-based ones.

In a bid to secure forward and backward linkages across the energy value chain, the company entered the coal mining business last year.

The company is also working to firm up fuel supply arrangements for its existing gas-based stations.

NTPC's consortium partners have expertise in oil extraction. While Canoro Resources is an upstream oil and gas company - it operates the Amguri development block - GeoPetrol has interests in Cambay and Krishna-Godavari basins.

(This article was published in the Business Line print edition dated September 30, 2005)
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