Awarding the rights to seek and produce coal bed methane (CBM) from the eight blocks auctioned last October is getting more chaotic with bidders questioning each other?s documents, leaving a panel of secretaries undecided. Great Eastern Energy Corporation (GEEC) and Australia? Arrow Energy recently complained to the director-general of hydrocarbons (DGH) about provisional winner Deep CH4 consortium, following which the regulator recommended rejection of Deep consortium?s bids. It is now the turn of Deep CH4 combine to pick the flaws in the bids put in by rivals who may stand a chance if the government decides to award the seven blocks to the next highest bidders.
Deep CH4 consortium has told the petroleum ministry that the bids of the two rivals are incomplete and without the commitment to undertake certain essential work programme. GEEC denied the allegation and told FE that all work commitments have been made as per government requirement. A questionnaire sent to Arrow Energy Ltd, the Australian parent of the four subsidiaries that bid for CBM blocks, remained unanswered till late Monday.
Deep has told the government that GEEC?s average annual production of CBM for last three years is 0.11 billion cubic meters, which is a questionable figure as the company is allegedly not selling that much quantity of gas. Besides, GEEC has been allegedly flaring huge quantity of gas for a long time, which according to Deep, is wastage of resources. Deep also alleged that GEEC has no gas utilisation plan.
GEEC president and COO Prashant Modi told FE that sales and production cannot be co-related as pipeline size are decided and distribution facilities designed in the light of the production rate after production starts. The company has put pictures of its distribution facilities in the public domain, Modi said. ?All our gathering and distribution infrastructure is in place, which is continuously being expanded. We have delivered more than what we have committed,? GECC told FE. The company also assured that sufficient off-take contracts are already in place.
Deep CH4 also alleged that GEEC took a long time to start production after getting exploration rights in 1994, which showed lack of interest. Modi said the company lost a few years because of the administrative changes in the central government which moved CBM from the ministry of coal to the ministry of petroleum. The company accordingly had to convert an agreement with Coal India Ltd to a production sharing contract with the petroleum ministry.
Rejecting the Deep consortium?s claim, Modi said the company has already drilled over 60 wells and would have about 300 wells in the next two years to produce about 3 million cubic meters a day or 100 million cubic feet a day. Deep CH4 also told the government that Arrow Energy Ltd, the Australian parent of the four subsidiaries that bid for CBM blocks, has allegedly not provided its standalone acreage, reserves, production and experience, a person close to Deep CH4 told FE.
Since the financial and performance guarantee of the bidding companies is provided by the parent, only the parent?s standalone acreage, reserves, production and experience should be counted while assessing the bids, not that of the subsidiaries which form part of a consolidated estimate.
Arrow?s annual report on its website is for the entire group which includes subsidiaries, Deep pointed out. There is no mention of standalone acreage, reserves, production and experience of Arrow Energy Ltd, alleges Deep consortium. A questionnaire sent to the Australian company remained unanswered.