The Brisbane-based company was awarded a 35-40% stake in the blocks as part of a bidding consortium with India’s GAIL and Tata Power, as well as Swedish infrastructure group Energy Infrastructure.
Chief executive Nick Davies said the blocks, represented the company’s first step towards international expansion.
“Current gas price contracts in India are in the range of $7 to $10 per GJ, with one recent spot sale done at $13.28. This compares with the average of $3 to $3.50 per GJ in our home market of Queensland,” he said.
At these prices, Davies said a 35% interest in 20 petajoules per annum of gas sales in India, could generate $50 million in additional net revenue for Arrow.
Davies added that his company was also viewing big growth opportunities in other parts of Asia.
“India, China and Indonesia have enormous potential resources of coal seam gas, and all three are experiencing long-term critical supply shortages of gas,” he said.
“We intend to address this need by utilising the intellectual property gained through the successful development of multiple CSG fields in Australia.
“Arrow’s demonstrated technical and operating capabilities were a key element of the successful bids in India and we expect this capability to be a competitive advantage in securing projects elsewhere.”
Of the three Indian blocks, the Raj Mahal block in the state of Jharkhand has an estimated resource of 5.5 trillion cubic feet of gas, with the other blocks – Mand-Raigarth and Tatapani-Ramkola - in the state of Chhattisgarh having estimated resources of 4.2Tcf and 1.9 Tcf respectively.
Davies said India was an ideal country for exploration, appraisal and commercial development of coal seam gas, as the country has about 765 million tons of oil equivalent of proven coal reserves, representing about 7% of the global figure.
“Arrow has significant commercial and technical resources in the sector, especially following the completion of our recent merger with CH4 Gas Limited,” he said.
In addition to being highly prospective for CSM, India is set to emerge as the fourth biggest user of energy globally by 2010. Gas demand in the Asian nation is projected to soar from about 2000 PJ per year in 2005 to 5200 PJ by 2025.
The consortium’s exploration activities in India are planned to start early next year. In preparation, GAIL staff will be seconded to Arrow as part of the technology transfer process.
These personnel are expected to represent several technical disciplines and will ensure the Indian company plays a significant role in Arrow’s operation of the Indian blocks.
The consortium competed against 18 Indian firms and seven other foreign companies for the 10 blocks offered in the licence round. The three successful bids were its first, third and fourth ranked choices.
“Arrow and GAIL look forward to cementing a productive partnership,” Davies said.
“The award of the three blocks is a significant result as we continue to advance our margin-focused strategy.”
