CCEA clears coal bed methane rights for Coal India

Latest proposal will allow CIL to explore CBM in 450,000 hectares licensed under the coal mines Act

The Cabinet Committee on Economic Affairs today cleared a proposal allowing state-run Coal India Ltd (CIL) to explore coal bed methane (CBM) from its existing coal blocks on a nomination basis.

The Cabinet Committee on Economic Affairs (CCEA) allowed CIL to explore and produce coal-bed methane (CBM) in its existing mines. The latest proposal would allow CIL to explore CBM in 450,000 hectares leased or licensed under the coal mines Act.

As per the current regulations, simultaneous extraction of coal and CBM from the same blocks were not allowed. Major private sector CBM players in India include Great Eastern Energy Corporation, Essar Oil and Reliance Industries. The country is expected to produce 7.4 million standard cubic metres a day over the next couple of years.

From 2001 onwards, 33 CBM blocks were awarded in four auction rounds with three coming under nomination basis, however a policy regime for simultaneous extraction was not in place. CBM production in India is expected to touch 7.4 million metric standard cubic metre per day. As per the estimates by the directorate general of hydrocarbons, the overall CBM reserves in India come to around 4.6 trillion cubic metre.  The decision would also put an end to the dispute between the petroleum and coal ministries on under which ministry’s purview CBM would come under.

Petroleum minister M Veerappa Moily was batting for allowing the simultaneous CBM extraction rights for captive coal producers too. With the government unable to find a consensus in this regard with strong opposition from coal minister SriPrakash Jaiswal, the plan was put on hold. According to reports, CBM extracted by CIL will be priced and marketed as per the petroleum ministry's gas pricing and utilisation policy.

CIL has reportedly shortlisted five blocks in Jharkhand, with an estimated reserve of 1 trillion cubic feet in its initial stage.