Supply assurance to add more gas consumers in the east: Santosh Chandra, CEO, Essar Oil and Gas Exploration and Production
The biggest customers are the steel and alloy plant of SAIL. We also supply to other industrial units of Phillips Carbon Black and Graphite India, Matix fertilizer plant and others. We had to make them realise the cost benefits of natural gas over other fuels.
Essar Oil and Gas Exploration and Production (EOGEPL) recently dispatched its maiden compressed coal bed methane (C-CBM) natural gas cascade truck for Bengal Gas Company’s first CNG station in Kolkata. The Raniganj East CBM Block in West Bengal, with its 348 wells, is a flagship asset of the company with a significant volume of CBM gas resources where it has invested more than Rs 4,000 crore. Santosh Chandra, CEO, EOGEPL, tells FE’s Anupam Chatterjee the steps the company has taken to promote gas among local industries and why he is optimistic about the future of gas.
How have the first few years of running CBM operations been in Raniganj?
We had developed this field in anticipation of offtake from the upcoming GAIL pipeline. There were delays on both these fronts which capped our ability to increase production. So, in the last few years, we put in a lot of effort in developing local industries, mostly small and medium iron foundries, to convince them to switch to gas from coal. We have almost 20 odd customers in this region to whom we are supplying through pipelines. About half of them procure the gas from GAIL, which procures gas from us, and we directly supply to the rest of them under the marketing freedom policy.
What is the benefit for consumers to use gas as a fuel?
The biggest customers are the steel and alloy plant of SAIL. We also supply to other industrial units of Phillips Carbon Black and Graphite India, Matix fertilizer plant and others. We had to make them realise the cost benefits of natural gas over other fuels. A dispassionate analysis of coal versus gas, taking into account the inefficiencies and rigidities related to using coal-based furnaces, the cost difference comes down significantly. There are of course the larger advantages of using cleaner fuels.
What do you think the future holds for CBM producers?
When we did not have much offtake, we were keen to supply without making what I would say the desired numbers, but still, we were able to sell. But with current developments on the climate change front, regulatory mandates restricting the use of polluting fuels are expected to drive up the sale of gas. Slowly industries will be nudged towards that. We are excited about the Prime Minister’s vision of increasing the share of gas in the energy basket to 15% from the current level of 6%. Energy transition, induced by climate change, is taking place all over the world.
How can offtake increase?
Everyone wants assured supply. I am aware of industries in this part of the country which is willing to switch to CNG but are concerned about receiving regular guaranteed supply. An established supply chain will ease a lot of concerns. Coal has multiple supply points, but for the case of gas, people were worried about supplies, which are imminent with the GAIL pipeline coming up.
Can you list a few on-ground developments which support your optimism?
In March 2020, we started setting up compressed natural gas (CNG) facilities to allow CNG to be shipped through trucks. Through this mode, we supply to some units in the nearby districts of Purulia, Bankura and feed to a few GAIL CNG stations as well. The first CNG shipment entered Kolkata recently but it was only a preparation for commissioning. The city will have its CNG stations, the first planned in Garia in south Kolkata to be operated by Bengal Gas. It is a good beginning. The city did not have access to CNG and things are looking to change. The auto-rickshaws there run on LPG which is more expensive compared to CNG.