NEW DELHI: Chinese equity in the new owner of Arrow Energy, that operates five coal bed methane (CBM) blocks in India, has prompted the oil ministry to hold back approval for the company’s request to amend its CBM contracts to reflect the change in ownership, officials said.
Arrow, an Australian company specialising in CBM and shale gas, was acquired by an equal joint venture of Shell and PetroChina in August 2010. Subsequently, its international assets, including Indian CBM blocks, were hived off to a new company Dart Energy.
Dart Energy wants the CBM contract to reflect its name in place of Arrow, but the oil ministry has rejected its application four times in the past year, although on technical grounds that the request was not made in proper format.
The oil ministry and DGH officials said they were curious about the company’s China connection, particularly because its CBM blocks are located in Maoist-infested areas in central India, and Assam, and the company is in talks to buy ONGC’s CBM blocks. “The shareholding of Dart is being scrutinised,” one official said requesting anonymity.
Dart Energy’s country manager Sudhansu Adhikari has written a letter to the director general hydrocarbons, SK Srivastava.
“The amendment is only in changing name from Arrow to Dart in five places of CBM contract. It is highly frustrating that the government can take such long time with this simple thing which has been vetted by the DGH,” Adhikari said in the letter. “I would request your good office to please take action to clear this red tape created by the ministry of petroleum and natural gas,” he added in the letter.
Adhikari, who was earlier the head of Arrow’s India operations, declined to comment on the matter. “I’m not authorised to talk to the press,” he said responding to ET’s phone call.
DGH responded by sending a letter to the oil ministry recommending Dart’s case and suggested that the contract should be amended “at the earliest”. DGH said that the Assam government was asking for an amendment before issuing CBM exploration licence to Dart. The Madhya Pradesh government has already issued the license without asking for the changed contract, it said in the letter.
The oil ministry, DGH, Dart and Arrow did not respond to ET’s email queries. Government officials say that the matter is taken seriously after Dart emerged as a front-runner in acquiring CBM assets of ONGC. “Dart Energy is in advanced negotiations to farm in to one or more CBM blocks that were awarded to the Oil and Natural Gas Corporation (ONGC), India’s leading state-owned oil and gas company, during the CBM-I bidding round in 2003,” Dart said in its website.
A senior ONGC official confirmed that company was in talks with Dart for its CBM blocks. Government officials said they would ask more details and documents from Dart before approving the amendment on CBM contracts.
According to Dart’s Annual Report for 2011, most of its board members were in Arrow’s board before its international assets were transferred to Dart. Prior to becoming executive chairman of Dart, Nicholas Davies was CEO and managing director of Arrow. Other executive directors Shaun Scott and Stephen Bizzell held key board-level positions in Arrow. David Williamson, one non-executive director was in the board of Arrow from 2006 to August 2010.