Indian Great Eastern signs coalbed methane deals with steel firms
New Delhi (Platts)--3Sep2008
platts.com
Indian coalbed methane producer Great Eastern Energy Corp. Tuesday said
it has agreed gas sales deals with two domestic steel producers and renewed
contracts with some existing customers at well above $17/MMBtu.
The company has agreed a contract with SAIL Growth Works, a subsidiary of
the Steel Authority of India, for an initial supply of 6,600 cubic meters/day
(233 Mcf/day) at a delivered price of $17.46/MMBtu.
"The amount of gas supplied to this customer is expected to increase
significantly as gas production increases and the steel pipeline for the
supply of the gas has been successfully laid," Great Eastern said in a
statement. "SAIL also has further large units within easy reach of Great
Eastern's license area," the company added.
Great Eastern has also "received confirmations" from Kedia Group of
Industries to purchase 51,000 cu m/day (1,801 Mcf/day) for two of its steel
products manufacturing units.
The delivered gas price to Kedia for the initial three years would be
$17.32/MMBtu, rising to $17.49/MMBtu for a further two years, said Great
Eastern. "This will be the base price and the price will be revised again
after five years," the company added. The contracts with Kedia are for 20
years, with supplies expected to begin next year.
Carbon credits arising from Kedia contracts would also be available to
Great Eastern, the company said.
Great Eastern also said it has renewed gas sales agreements for another
year with those customers whose initial terms of agreement have expired,
without identifying the customers involved.
The renewals are for the supply of approximately 5,000 cu m/day (176
Mcf/day) at a delivered price of $18.59/MMBtu, up by 20.6% over the previous
price of $15.41/MMBtu.
Great Eastern announced in July 2007 that it had started sales of coalbed
methane in India to industrial users at a delivered price of $13-15/MMBtu.
"The national network for gas distribution in India is limited, although
it is developing, and as such markets tend to be localized," the company said
in June this year when announcing its results.
"Within that local market, we are seeing regular gas price increases,
with some major industrial users currently paying as much as $28.55/MMBtu and
with an average price of $22.02/MMBtu paid by a basket of 19 local companies,"
the company added.
Great Eastern, which is listed on the London Stock Exchange's Alternative
Investment Market, has an exploration and development license valid until 2036
over a 210 sq km block at the Raniganj coal fields in West Bengal. As of June
2007, the block has 1.92 Tcf of gas-in-place, as certified by the
Netherlands-based Sewell and Associates.
"The second drilling program of 30 wells, as outlined at the time of the
results in June, is also making good progress, with nine wells drilled and a
further 10th well currently being drilled," the company said Tuesday.
The company is currently seeking a secondary listing on Indian stock
exchanges.
Another Indian player with coalbed methane plans is state-run Oil and
Natural Gas Corp., which announced Monday that it would be starting pilot
production from December.
ONGC's CBM production is scheduled to begin at the Jharia mine block at
the eastern Jharkhand state. Commercial production is scheduled to start from
2011 with a production of 400,000 cu m/day to be sustained for a period of 10
years, ONGC said.
--Shiva Lingam, newsdesk@platts.com
--KimFeng Wong, kim_f_wong@platts.com |
