Coal bed methane is a viable solution to India's energy needs: Dart Energy

Sudhansu Adhikari

It has been difficult year for Australia based non-conventional gas exploration and production company, Dart Energy, particularly on account of their experiences in India.  For the last two years, they have not been allowed to initiate any work here. Now, the government is worried about the possibility of Chinese shareholding in the company.  Dart Energy's India chief, Sudhansu Adhikari, responded over e-mail to questions put by Business Today's Anilesh S. Mahajan on the company's challenges and its strategy. He dismissed reports of his company's Chinese links, and indicated it could be a part of a corporate rival's dirty tricks strategy.

Dart is doing fine in most of the countries you are in, holding more than 50 CBM( coal bed methane) and shale gas assets globally. But what is going wrong here in India?
In India, Dart Energy is the leading foreign CBM operator with demonstrated record of fast-track exploration activity in India and blue chip domestic Indian partners including GAIL, Oil India, Tata Power and potentially ONGC .  It was one of the very few foreign companies to enter the coal bed methane sector in India, back in 2006, as Arrow Energy International at that time.

Dart Energy was awarded three blocks in the CBM III bidding round, opened an office at Delhi in January 2007, and in May 2008 commenced drilling its first wells in India. Since then, Dart Energy has fulfilled all its exploration commitments on these three blocks having drilled 22 wells. Dart Energy was awarded two additional blocks in the CBM IV bidding round in 2010. We are doing fine.

What is Dart Energy's outlook of CBM scenario in the country?
Like in every international market in which we operate, there are always challenges - technical and commercial. From an overall perspective, however, the CBM prospect in India is sufficiently attractive that we have made a long-term commitment to a presence in the Indian market. Energy is fundamental to the economic development in any nation and India is no different.  

There is a strong case for high levels of growth in the demand for gas in India on the back of economic growth. In the absence of new domestic conventional oil & gas sources, we believe that India's CBM resource is a viable source of gas supply that can meet part of the shortfalls. We are optimistic of the development of CBM resource and potentially shale gas resource in the near term.  We have carried out successful exploration programs in India in our CBM III blocks demonstrating our CBM expertise and execution capabilities.

But there was no result.
Technical results showed insufficient gas for a commercial CBM project. Unfortunately, the very nature of exploration business exposes operators to these technical risks. That said, we are confident that we can apply our global CBM expertise in the Indian CBM scenario and make a meaningful contribution to boost much needed energy supply source domestically.

Of late we have been hearing that the Government of India is looking into the shareholding pattern of Dart Energy as they suspect that there could be "Chinese links". Please let us know your side of the story.
We have not been made aware of Government of India's inquiry into the shareholding of Dart Energy. The assertion of "Chinese link" is completely wrong. The ultimate parent company of Dart India, being Dart Energy Limited (ASX: DTE), is a publicly owned company trading on the ASX, and part of the ASX200 Index. Information on the shareholding of Dart Energy is publicly available from the Australian corporate regulators, the Australian Securities and Investments Commission. Under Australian law, any shareholder with a greater than 5 per cent holding in a public company must report that shareholding. A review of all the readily available public data will confirm that Dart Energy does not have any Chinese shareholding. We can only conclude that this is a story that some of our competitors are spreading, hoping that this might change the outcome of the ONGC farm-in process. In some respects, this in not unexpected given Dart Energy's experience, expertise, capability and demonstrated track record in India and globally, make it the "partner of choice".

We have been told that the company has not got the clearances for changing the name from Arrow Energy to Dart Energy in the CBM contracts. Please give more details.
We have received approvals from the Government of India for the change of name of our Indian subsidiaries to Dart Energy (from Arrow Energy) and for this to be reflected in our CBM contracts.  All our CBM contracts in India were signed between the Government of India and Arrow Energy, which is what Dart Energy used to be known as prior to a corporate transaction in Australia about two years ago, during which Arrow Energy was split into two parts. One part, which owned only assets in Australia, was acquired by a consortium of Shell and PetroChina, which is presumably where the mistaken concept of a China link comes from. The other part, including all our Indian assets amongst others, was renamed as Dart Energy, and listed on the ASX.  MoPNG scrutinized all of the documents related to this transaction, which incidentally are all court approved in Australia. This includes a complete list of Dart Energy's shareholders on the ASX. Based on this, more than a year ago in March 2011, MoPNG approved the change of name of our company in India to Dart Energy.

We hear that Dart Energy is planning to farm-in to ONGC operated blocks. Please let us know the status.
Our association with ONGC formally dates back to 2009. Dart Energy and ONGC signed an MoU for cooperation in India and internationally on CBM in January 2009. Since then, we have worked with ONGC's technical teams on geological interpretation and selection of best technology in different coal basins. In the spirit of our MoU with ONGC and to demonstrate our strong partnership values, we organized several in-house workshops attended by personnel from our valued partners including ONGC, GAIL, OIL, and Tata Power. We believe that we demonstrated ourselves to be competent, committed and reliable partners.

Specifically in the context of farm-in to ONGC operated blocks, we responded to a request for an expression of interest. CBM is our specific area of expertise globally and we believe that we can complement ONGC in development of its CBM blocks in a fast and cost effective manner, along with making the right technology choices. Our objective is simple: to work with ONGC, to bring our technical expertise to the table, and to help make CBM a success story in India.