Essar Oil May Spend $300 Million to Produce Coal Gas
Sept. 9 (Bloomberg) -- Essar Oil Ltd., operator of India's second-largest non-state refiner, may spend $300 million to produce natural gas from a coal seam block in the eastern state of West Bengal, which is expected to start output in December.
The refiner and explorer may borrow $150 million from local banks over the next three years to finance the project, Shishir Agrawal, chief executive officer of Essar Exploration & Production India Ltd., said by telephone from New Delhi today.
"We will generate around $150 million from sales of the gas over the next three years when we will reach a peak," Agrawal said. "We hope to raise the money by November end."
Essar Oil was among bidders for coal-bed methane fields when they were first auctioned by India in 2001. The South Asian nation, which imports about 75 percent of its energy requirements, is currently holding talks with potential explorers for India's biggest oil and gas field auction, including 10 coal bed methane blocks.
Essar Oil gained 1.7 percent to 154.50 rupees in Mumbai trading, the highest level since Aug. 4. The benchmark Sensitive Index rose 0.4 percent.
India's Directorate General of Hydrocarbons upgraded the total gas reserves at Essar Oil's coal-bed methane block at Raniganj to 60.77 billion cubic meters, or 2.2 trillion cubic feet, from 42 billion cubic meters, Agrawal said. The reserves are equal to 19 percent of the deposits in KG-D6, India's biggest gas field operated by Reliance Industries Ltd.
Certified Report
The reserves at the field are being certified by U.S. company Netherland, Sewell & Associates Inc., Essar Oil said in a statement to the Bombay Stock Exchange today. The report may be completed by the middle of next month and would be needed to raise the money, Agrawal said.
Essar Oil plans to drill 500 wells in the area to produce 3 million cubic meters a day of gas over the next three to 3 1/2 years, Agarwal said. Output may start by December from 15 wells, he said.
Great Eastern Energy Corp., listed on the London Stock Exchange, started selling gas from coal beds in West Bengal state in July 2007, according to the company's Web site. The company produces 68,000 cubic meters of coal-seam gas a day, Oil Minister Murli Deora said Feb. 24.
Reliance Industries and Oil & Natural Gas Corp., India's most valuable companies, have 135.8 billion cubic meters of coal-seam gas reserves, the minister said that day.
To contact the reporter on this story: Rakteem Katakey in New Delhi at rkatakey@bloomberg.net .
Sept. 9 (Bloomberg) -- Essar Oil Ltd., operator of India's second-largest non-state refiner, may spend $300 million to produce natural gas from a coal seam block in the eastern state of West Bengal, which is expected to start output in December.
The refiner and explorer may borrow $150 million from local banks over the next three years to finance the project, Shishir Agrawal, chief executive officer of Essar Exploration & Production India Ltd., said by telephone from New Delhi today.
"We will generate around $150 million from sales of the gas over the next three years when we will reach a peak," Agrawal said. "We hope to raise the money by November end."
Essar Oil was among bidders for coal-bed methane fields when they were first auctioned by India in 2001. The South Asian nation, which imports about 75 percent of its energy requirements, is currently holding talks with potential explorers for India's biggest oil and gas field auction, including 10 coal bed methane blocks.
Essar Oil gained 1.7 percent to 154.50 rupees in Mumbai trading, the highest level since Aug. 4. The benchmark Sensitive Index rose 0.4 percent.
India's Directorate General of Hydrocarbons upgraded the total gas reserves at Essar Oil's coal-bed methane block at Raniganj to 60.77 billion cubic meters, or 2.2 trillion cubic feet, from 42 billion cubic meters, Agrawal said. The reserves are equal to 19 percent of the deposits in KG-D6, India's biggest gas field operated by Reliance Industries Ltd.
Certified Report
The reserves at the field are being certified by U.S. company Netherland, Sewell & Associates Inc., Essar Oil said in a statement to the Bombay Stock Exchange today. The report may be completed by the middle of next month and would be needed to raise the money, Agrawal said.
Essar Oil plans to drill 500 wells in the area to produce 3 million cubic meters a day of gas over the next three to 3 1/2 years, Agarwal said. Output may start by December from 15 wells, he said.
Great Eastern Energy Corp., listed on the London Stock Exchange, started selling gas from coal beds in West Bengal state in July 2007, according to the company's Web site. The company produces 68,000 cubic meters of coal-seam gas a day, Oil Minister Murli Deora said Feb. 24.
Reliance Industries and Oil & Natural Gas Corp., India's most valuable companies, have 135.8 billion cubic meters of coal-seam gas reserves, the minister said that day.
To contact the reporter on this story: Rakteem Katakey in New Delhi at rkatakey@bloomberg.net .
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