ESSAR Oil Ltd (EOL) plans to start production from Ratnagiri oil field from next year-end. A company official said it was expected that there would soon be an agreement with the Government for starting production from the oil field.

Essar Oil has 50 per cent stake in the oil field, while ONGC has 40 per cent and Premium Oil, a British company, has 10 per cent stake.

This is a medium-sized oil field with reserves estimated at around 500 million barrels. The company expects to incur expenditure in excess of $300 million (Rs 1,373.40 crore) for starting production from this field.

Currently, EOL is into the exploration of two oil fields - in Cambay basin (Gujarat) and in Cachar (Assam) - both being awarded under NELP-V.

"These blocks are in the second stage of development. Normally it takes five to seven years for a block to go to production. Therefore, production from these fields will take some time to start," the official said.

The company had in May 2005 entered into an agreement with the Myanmar Government for exploration and production of two oil blocks there.

"These two blocks have proven reserves of oil and gas and we are hoping for a good yield," he said.

Essar Oil, also engaged in exploiting coal-bed methane, said the company is developing the Raniganj coal field near Durgapur in West Bengal.

"We do not get gas from day one in coal fields. It is at present in dewatering stage. Once this is over gas (methane) can be exploited," the official said.

The advantage with methane is that it does not require any refining and can be directly delivered to the customer unlike in the case of petroleum crude. "Methane or methane-based fuels are at least four times cheaper than fuel obtained from petroleum crude," he said.

The company had earlier surrendered three oil blocks - two located in Rajasthan and one in Mumbai offshore - awarded in 1993. "After some development works we found those to be commercially unviable," he said.