HOEC awaits approval from regulator to increase gas production at PY-1 field

Hindustan Oil Exploration Company (HOEC) is hopeful of getting approval from the Directorate General of Hydrocarbons for going ahead with a work programme that would result in the production of more natural gas from the PY-1 field in the Bay of Bengal.

HOEC produces 30 million cubic metres of gas a day from the field. Most of the gas is sold to PPN Power Generating Company, which runs a 330 MW power plant at Cuddalore, some 180 km south of Chennai.

HOEC's Joint Managing Director, Mr Manish Maheshwari, told Business Line on Thursday that the contours of the work programme would depend on the directions received from the DGH, which regulates exploration and production of oil and natural gas in India. “But it would require offshore intervention,” Mr Maheshwari said.

The quantity of additional gas again depends on the work programme, which in turn depends on the programme that the DGH approves.

More gas coming from the field would primarily benefit the PPN power plant. Today, 60 per cent of the plant's requirements is met by PY-1 gas. Naphtha is used for the other 40 per cent. HOEC is bound by agreement to sell the gas to PPN at $3.75-3.95 per Million British Thermal Unit for the first six years (beginning last year).

Since ‘fuel' is a pass-through cost, the gains from the lower fuel cost will benefit TANGEDCO, part of the Tamil Nadu Electricity Board, which buys and distributes power.

Mr S. Narayanan, Managing Director, PPN Power Generating Company, told Business Line that his company was “hopeful of getting additional gas from PY-1 by December”.

HOEC, which is 48 per cent owned by ENI of Italy, has full ownership of the PY-1 field. It also has a 21 per cent interest in the nearby PY-3 oilfield.

On the NSE, the HOEC share closed at Rs 167.50 on Thursday.

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