With the final scope and commercial terms expected to be finalised in June, the MOU involves GAIL investing in Arrow’s operations to fast-track the monetisation of the latter’s CSM development portfolio.

Arrow said GAIL’s investment would be made across the entire value chain, including exploration, production and related infrastructure.

Chief executive Nick Davies recently told EnergyReview.net that Arrow has about 10 projects in its ‘queue’ – promising prospects waiting for capital injections so that they can be developed.

“The top priorities are exploring and appraising the Clarence-Moreton Basin south of Brisbane, the Styx River Basin north of Rockhampton and the Nagoorin Graben near Gladstone,” he said.

“We’ve made good find in these areas. In the Nagoorin Graben, our second Boyne River well found 90 metres of net coal. In the Clarence-Moreton Basin, we drilled 11 wells and 10 were successful.”

Under the MOU, the two companies will also form a joint venture to investigate CSM opportunities in India.

Arrow said this JV, which may include other parties, would combine GAIL’s country knowledge and market position with Arrow’s technical and development experience to potentially bid for CSM exploration blocks in India’s upcoming acreage release round in India.

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 licensing round for CSM. In India, CSM is known as coal bed methane (CBM).

“GAIL lost out due to a lack of technical expertise. They are looking for a partner who can tick that box,” Davies said.

The Indian Government has announced the CBM3 licensing round and a GAIL-Arrow JV is very likely to bid for blocks. The round will close in July and blocks will be awarded in September.

In addition, GAIL will deploy some of its technical staff to Arrow’s operations to undertake a mutual technology exchange.