New Delhi: Power utility NTPC Ltd is in talks with another state-run firm, Oil India Ltd (OIL), to jointly explore a gas block in Arunachal Pradesh it won in a bid five years ago after two of its overseas partners decided to pull out of their consortium.
NTPC is looking for natural gas to fuel its underutilized power plants and enable future expansion.
It acquired the rights to explore the block AA-ONN-2003/2 under the New Exploration Licensing Policy 5 (Nelp 5) in 2005 as the lead partner in a consortium that included Geopetrol International Inc. of France as operator and Canoro Resources Ltd of Canada. Another Canadian firm, Brownstone Ventures Inc., joined them later.
“They (Geopetrol and Canoro) didn’t want to continue. So we are talking to other possible partners such as Oil India,” said R.S. Sharma, chairman and managing director, NTPC. He did not explain why the partners had left.
“NTPC has approached us and they want us to be a part of the consortium,” said N.M. Borah, chairman and managing director, OIL.
The government has allocated rights to explore blocks through a bidding process in eight rounds under Nelp. NTPC has been allotted five gas blocks in total.
The utility is already in partnership with OIL to explore a block in the Krishna-Godavari basin. The consortium includes Oil and Natural Gas Corp. and Andhra Pradesh Gas Infrastructure Corp. Ltd.
“NTPC does not have the technology to develop the block on their own. A tie-up with OIL will help it explore the block,” said Rupesh Sankhe, equity research analyst at Angel Broking Ltd.
Sankhe said NTPC’s requirements will increase in coming years. “They will have to expedite the exploration and production work in these blocks if they want to meet their expansion targets.”
Geopetrol could not be contacted to discuss why it quit the Arunachal Pradesh project. Canoro Resources stated on its website that drilling operations remain suspended on the block due to “site conditions and other associated factors”.
“With drilling operations at a standstill and the future operations of the block uncertain, the operator has notified the partners that it has resigned operatorship. Canoro withdrew its support for continued operations and elected to go into default,” the website said.
Seven NTPC power plants are fuelled by gas or liquid fuel, with a combined capacity of 3,955MW. It also runs a 1,940MW gas-based plant through a joint venture.
NTPC needs a total of 16 million standard cu. m per day (mscmd) of gas, but has to manage with a supply of 13.88 mscmd currently. The firm has a power generation capacity of 31,704MW, which it plans to increase to 50,000MW by 2012, of which 4,550MW will be gas-based.