Essar Oil and Gas Exploration and Production (EOGEPL), an arm of Ruia-owned Essar Group, today announced it has signed a 15-year Gas Sale and Purchase Agreement (GSPA) with state-owned natural gas-utility GAIL (India).
“The GSPA entails a 15-year gas supply contract whereby the company will be able to monetise its entire Coal bed Methane (CBM) production of 2.3 mmscmd from the Raniganj East block at a globally competitive price,” the company said in a statement on its website today.
It added the discovered price for the gas under the agreement will lead to a substantial increase in the Company’s top-line. “We were able to generate more than Rs 210 crore as revenue from our oil and gas business last financial year and expect to generate over Rs 400 crore in the current fiscal, EOGPL Chief Executive Officer (CEO) Vilas Tawde had told ETEnergyWorld in an interview in June.
According to the company, of the 500 wells to be dug at the Raniganj East CBM block, EOGEPL has already completed drilling of 346 CBM wells and is looking at ramping up production to 2.3 Million Cubic Meter per Day (mmscmd) from more than 1 mmscmd currently.
EOGPL said in the statement it had invited bids from prospective buyers of CBM gas and GAIL submitted the winning bid, offering to pay a price linked to the three month’s daily average price of Brent crude.
The company said that post the cabinet decision on allowing simultaneous exploitation of unconventional hydrocarbons, EOGEPL has appointed international consultants to study the company’s assets and is upbeat about the shale potential in the Raniganj East CBM block.
“On an upside, shale development would benefit greatly due to the synergy with CBM operations, like water requirement, and the gas evacuation and handling facilities. Initial estimates indicate that we would need to invest close to Rs 7,000 crore for developing the shale gas potential in the block to recover about 1.6 tcf from the field,” Tawde added.
The company plans to invest around Rs 900 crore in the coming 18 months and the plan includes investing Rs 300 crore in the current fiscal ending March 2019 to monetize the Raniganj block, Tawde had said in June.
EOGPL’s CBM portfolio includes five blocks. Only one of them, Raniganj East, is currently operational. Other blocks include Rajmahal in Jharkhand, Talcher and Ib Valley in Odisha and Sohagpur in Madhya Pradesh. Tawde had said the five blocks possess estimated 10 Trillion Cubic Feet of CBM reserves and the initial work on the Rajmahal and Sohagpur is expected to start post monsoon.Share This