ONGC to generate revenues from CBM production

Kolkata: ONGC will take up its first gas sales agreement from the $200-million CBM development project in Jharkhand.

The company is scheduled to sign the agreement with Kolkata-based Calcutta Compressor and Liquifaction Ltd (CC&L) for sales of a 5,000-50,000 standard cubic metre of gas a day from its Jharia asset in Jharkhand at $5.1 an mmBtu, on a long-term basis.

According to sources, ONGC will start generating revenues from CBM production with retrospective effect from February 5, 2009. Assuming that ONGC will initially sell up to 5,000 scmd of CBM, back-of-the-envelope calculation suggests that the deal will generate approximately Rs 9-10 lakh of revenue a month for the E&P major.

CC&L is currently setting up compression and transportation facilities to sell the gas to local industries.

Confirming the news, Mr Srikanta Chatterjee, Director (Marketing) of CC&L, told that as a prerequisite of the GSA, CC&L had already submitted a bank guarantee of Rs 12 lakh with ONGC.

The company was also slated to pay approximately Rs 10 lakh to ONGC against the promised minimum guaranteed off-take for February.

According to the Director (Technical), Mr Kingshuk Ghosal, CC&L is expecting to create the required compression and transportation facilities for selling the gas to small industries in and around Jharia by next month.

The company also has a long-term plan to produce compressed natural gas in Kolkata, with increase in supply of CBM from ONGC.

The oil and gas major has already established a reserve of 18 billion cubic metre of CBM in three blocks — Jharia, Bokaro and South Karanpura in Jharkhand.