New Delhi: State-owned NTPC Ltd, which is fighting a lawsuit against Mukesh Ambani-controlled Reliance Industries Ltd (RIL) over the supply of gas from the former’s D6 gas block in the Krishna-Godavari basin (KG D6), is in talks with state owned exploration and production firms Oil and Natural Gas Corp. Ltd (ONGC) and Oil India Ltd (OIL) for jointly bidding for blocks in the eighth round of the New Exploration Licensing Policy (Nelp-8).
“We will partner with a public sector company for Nelp-8 and have been in talks with ONGC and OIL for the same,” said a top NTPC executive who did not wish to be identified.
India has announced its biggest auction ever of 70 oil and gas blocks. Under the Nelp policy, the government gives companies the rights to explore blocks through a bidding process.
While R.S. Sharma, chairman and managing director of ONGC, declined comment, a senior OIL executive who did not wish to be identified confirmed that his organisation is in talks with NTPC.
“There have been discussions. We have not finalised anything, We need to study the prospectivity of the blocks,” he added.
NTPC’s move stems from a desire to discover enough natural gas to feed its gas-based power plants, which are currently operating at lower levels of utilization and efficiency because of unavailability of the fuel.
The country’s largest power utility made the first move towards this in 2005 when it acquired rights to explore a block in Arunachal Pradesh under the New Exploration Licensing Policy-V (Nelp-V) by partnering with Geopetrol International Inc. of France and Canoro Resources Ltd of Canada. NTPC is the lead partner in this consortium.
NTPC has seven power plants fuelled by gas or liquid fuel with a total capacity of 3,955MW; it also runs a 1480MW gas-based plant through a joint venture. NTPC has a total gas requirement of 16 million standard cubic metres per day (mscmd) but has to manage with a supply of around 11.5 mscmd.
Securing supplies: An NTPC power plant in Gujarat. The firm seeks to partner with a public sector company to bid for the oil and gas blocks in the eighth round of the New Exploration Licensing Policy.
NTPC sources some part of its requirement of gas from the spot markets because supplies through long-term contracts are not available on account of global demand for gas exceeding supply. Given this, gas producers can get a better price in the spot markets than through long-term contracts.
NTPC has a power generation capacity of 30,144MW, which it plans to increase to 50,000MW by 2012. Of the proposed capacity expansion plan in eleventh plan, 4,550MW will be gas-based.
“Any form of diversification which is backed by a credible business plan and takes into account long-term objectives of NTPC is positive,” said Monish Chatrath, executive director, at consultancy Mazars India.
NTPC turned in a net profit of Rs7, 827.40 crore on a revenue of Rs42,182.40 crore in 2008-09.
While the ongoing court battle with RIL over the supply of gas has already delayed NTPC’s plans to expand its power generation capacity by 2600MW, its earlier plans to source gas from locations outside India have not yielded any results. It is still trying to secure a contract for gas supply of 3 million tonne a year in lieu of setting up a 700MW gas-based power plant and a 500MW coal-based plant in Nigeria, but its efforts have been hit by a change in government in the African nation.