Great Eastern Energy Corporation (GEECL) and Essar Oil are upbeat about shale gas reserves in the CBM blocks of West Bengal, as Gail looks for more buyers as it is poised to start business with city gas distribution. H Energy is looking for opportunities to supply imported gas from Malaysia to Gail in a bid to get a price advantage over Gail’s supplies from Dahej. While West Bengal finance and industry minister Amit Mitra hopes that the shale gas reserves in the state would attract Rs. 60,000 crore worth of investment in production, supplies and creating infrastructure, YK Modi, executive chairman, GEECL, said that it has found proven reserves of 6.6 trillion cubic feet of shale gas in the CMB blocks of West Bengal, which would require Rs. 15,000 crore worth of investment for exploration.
Mitra said Essar Oil has reported the same amount of reserves and it could change the state’s economic landscape by 2020. Modi said the Centre, through a notification in August 2018, has allowed exploration of shale gas in its CBM blocks. Prashant Modi, GEECL MD, said availability of technology is an issue and tax implications on it has to be made clear. Shale gas pricing should ideally be market driven and binging gas under GST is essential, enabling the sector to attract more investment. Cost of lifting shale gas is much higher than lifting CBM.
Prashant Modi said the Centre, through a notification in August 2018, has allowed exploration of shale gas in all CBM blocks. Prashant Modi, GEECL MD & CEO, said the key factors are: availability of technology, Shale gas pricing should be truly market driven, and binging gas under GST is essential, enabling the sector to attract more investment.
“Furthermore and of prime importance is that the notification came on August 20 last year and the remaining contract period for most blocks is for around twenty years. The contract period is not enough and we need time up to 2053 at least since we will all have to drill several hundred wells” Prashant Modi said.
GEECL has drilled over 150 wells, which has CBM reserves of 2.6 trillion units. Essar for CBM has drilled around the same number of wells and and is poised to increase CBM production to 2.3 million standard cubic metre per day from the present 1 mscm per day. Mitra said Gail, which is steadily progressing with its construction of Haldia -Jagadishpur pipeline, is poised to start business in West Bengal with city gas distribution. S Bairagi, Gail’s chief general manager-marketing, said out of its Rs. 15,000 crore investment for the 2,600 km Haldia-Jagadishpur pipeline, West Bengal would get an investment of Rs. 3,600 crore. The pipeline in Matrix Fertilizer, Durgapur, would reach by July this year, whereas the pipeline is expected to reach Haldia by December 2020.
An official said Gail, besides Matrix, has tied up with Bhusan Steel, Himadri Chemicals and other small players for sale of gas but it needs more buyers to utilise its pipeline capacity, which can carry 9 million metric cubic metres per day. For city gas distribution, the government has signed an agreement for supplies of 1.2 mmcd but Gail was looking for a 2.5 mmcd market. However, Gail’s present focus is to build infrastructure for gas distribution for which they have formed a JV with state-run Greater Calcutta Energy Supply Corporation and incorporated the JV on January 4, Mitra said.
He said the zero date for starting construction work of the 448-km pipeline in and around Kolkata is April this year, and Gail is committed to supply to 14 lakh consumers, including the transport sector by 2020. This would entail an investment of Rs 5,000 -6,000 crore. The economic life of the project is for twenty years.
Bairagi said the company was creating a pipeline network in Kolkata, Howrah, Hooghly, North and South 24 Paraganas and Nadia districts with compressor pressure of 14,62,101 kg per day. For the city gas distribution, Gail – apart from sourcing gas from Dahej – is looking at other sources. H Energy was building an LNG terminal at Kukrahati near Haldia on 47 acres, from where it was building a pipeline up to Khulna in Bangladesh. This would entail an investment of `1,500 crore for the terminal and another Rs 2,200 crore for the pipeline, said Darshan Hiranandani, MD and CEO. He said the company would import LNG from Petronas Malayaia and is committed to supply 2 million tonne to Bangladesh and keep 1 million tonne to market domestically. Gail may be a potential buyer for the city gas distribution, Hiranandani said.
THE FINANCIAL EXPRESS
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