The initiative is part of a major drive to meet India’s rapidly growing energy demand, which is being partly driven by massive economic growth in the region.
At a roadshow in Brisbane yesterday, Indian government officials painted a picture of one of the world’s fastest growing economies that is highly ranked as an attractive business destination. In 2006, GDP growth is expected to be over 8% and hit double-digit growth in the next two to three years.
The next round will close in July. Indian officials assured the oil and gas explorers present at yesterday’s roadshow that a faster approval mechanism had been put in place that would allow the blocks to be awarded by October 2006.
“We have tried to continuously improve our terms and provide clarity in our contracts while maintaining complete transparency in our entire bidding process,” said India’s Minister of State for Petroleum and Natural Gas Dinsha Patel.
One Australian company likely to be bidding for blocks in India's next CBM round is Queensland player Arrow Energy.
Arrow recently formed an alliance with Indian energy giant GAIL aimed at opening up new opportunities in Australia and India for both companies.
The partners are also hoping to get some CSM projects underway in India, where success could greatly boost Arrow's market cap.
GAIL will help to fund projects in Australia, investing in exploration, appraisal and development, and is likely to second staff to help Arrow, which will in turn train these workers in skills that can be taken back to India for future GAIL-Arrow joint ventures, according to Arrow managing director Nick Davies.
GAIL is one of the giants in Indian energy but it has no expertise in CSM and it failed to win blocks in India's last CBM licensing round.
At present India produces around 100,000 megawatts per annum and to meet demand this needs to increase to 212,000MW by 2012. Coal is the dominant source of India’s energy and will continue to supply around 50% of the country’s energy needs till at least 2020.
But the oil and gas share of the energy mix is increasing and India is particularly keen to encourage growth in the fledgling CSM market with the help of international companies.
India’s large coal resources are believed to host 162 trillion cubic feet of CSM resources in thick, high density coal seams, with favourable permeability and good thermal maturity. As much as 62% of India’s known coal-bearing areas are unexplored for CSM.
Some 16 blocks were awarded in earlier bidding opportunities, covering 7800 square kilometres and with a resource of 820 bank cubic metres. To date the exploration commitment on those blocks totals 121 core holes and 211 test/pilot wells, with an investment of $US150 million.
Australian drilling company Mitchell Drilling has been conducting contract drilling in India for the last three years, on behalf of Reliance Energy. To date Mitchell Drilling has drilled 27 exploration wells at 1000m depths and has developed 10 production wells.
Speaking at the roadshow, company chief Nathan Mitchell said CSM drilling in India had been very successful but operators faced a lack of resources related to services such as gas absorption and geological testing, and supply of equipment.
The company has just set up its own service group called Integrated Exploration Solutions to fill this need.
Mitchell said a major positive of working in India was access to a highly educated workforce.
