REL may hunt for gas with NTPC

Anil Ambani-controlled Reliance Energy is in talks with National Thermal Power Corporation to jointly bid for oil and gas blocks under the new exploration and licensing policy (NELP)-VI.

When contacted, both Reliance Energy and NTPC executives refused to comment. But sources close to the developments said the requirements of both Reliance Energy and NTPC were the same - natural gas.

So the companies were according priority to bidding for gas-rich blocks like the Krishna Godavari basin, the sources said. Since Mukesh Ambani-controlled Reliance Industries is also in the fray for gas-rich blocks, the Ambani brothers may end up competing against each other.

The sources added that Reliance Energy was also having discussions with a few other companies.

"NTPC has a stake in one block, which it won in the last NELP bid. Both of them do not have the experience to be an operator. So the Reliance Energy-NTPC combine will rope in a third company that will be an operator. This operator will pick up a minimum stake in the block," they added.

The sources said the combine was planning to bid for coal-bed methane blocks too. CBM is considered to be economical fuel for power plants. The companies are looking to bid for CBM blocks in Uttaranchal, Bihar and Tamil Nadu.

Under NELP VI, 55 exploration blocks are on offer, including 24 deep-water blocks, 6 shallow-water blocks and 25 onshore blocks. Apart from this, 10 CBM blocks are also up for sale.

Interestingly, NTPC is fighting a legal battle with Reliance Industries on a gas sale and purchase agreement. The case is pending with the Bombay high court. NTPC's tussle with Reliance Industries had begun with a gas purchase deal.

NTPC had signed a letter of intent with Reliance Industries in June 2004 for gas supplies to its Kawas and Gandhar expansion projects of 1,300 Mw each).

But Reliance Industries had reportedly sought changes in the terms of the agreement signed for the projects. NTPC took legal recourse last year for Reliance not honouring the agreement. Now, the possibility of both the parties reaching an out-of-court settlement cannot be ruled out.

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