Uchenna Izundu
OGJ International Editor
LONDON, Apr. 23 -- Gas Authority of India Ltd. (GAIL) agreed to buy gas from Indus Gas Ltd. on a take-or-pay basis from its SGL field in western India's Indus basin.
The contract is valued at $600 million and underpins Indus' development of the field on Block RJ-ON/6, which will cost $239.16 million.
"Given the level of interest shown by a number of banks in this project, Indus remains confident of being able to successfully put the required funds in place as per the planned time schedule," said company officials.
Under the arrangement, GAIL has a take-or-pay commitment for at least 90% of the agreed quantity of gas supplied. Indus will initially supply 7 MMscfd of gas, starting by Apr. 15, 2010. The amount supplied will increase to 33.5 MMscfd no later than 24 months after the date of the signing of this arrangement.
Gas from the SGL field will be delivered by pipeline, installed by GAIL, to a power plant in Ramgarh, northwest Rajasthan. The electricity supply from the plant is expected to rise to 270 Mw from 110 Mw. Rajasthan imports over 70% of its energy requirements because there isn't sufficient production.
Indus described the contract with GAIL as "the opening of a significant new commercial gas resource region in India."
Ahead of commencing supply of the additional balance of 26.5 MMscfd of gas, Indus and its coventures will be required to install a carbon dioxide removal facility. Should a shortfall of gas supply occur below the 90% of quantities agreed, the sellers will be required to offer GAIL certain preagreed discounts.
Indus expects the field to produce 33.5 MMscfd for at least 12 years at plateau and it has P50 in-place GIIP of 328 bscf gas and recoverable reserves of 246 bscf. Peak levels are to hit 42 MMscfd.
SGL will be developed with 14 gas wells; 2 manifold-headers; a total 65 km of 6-in. flow line from wells to GGS manifold; 3 phase test and inlet separator; gas dehydration unit; heat exchanger; CO2 removal unit; hydrocarbon dew point control unit; and condensate stabilization storage. Other equipment includes loading and unloading facilities; gas compression unit; gas turbine unit; water treatment plant; gas flare unit; SCADA control, and monitoring system.
Indus has a 63% interest in SGL field, with ONGC holding 30%, and Focus Energy Ltd. with 7%. Indus has a 90% interest in the remainder of Block RJ-ON/6.
The Indus basin straddles eastern Pakistan, where it has proven to be a highly prospective area with a large number of oil and gas field discoveries, and western India, where until now the basin has remained relatively under explored.
Contact Uchenna Izundu at [email protected].