OilMin seeks CBM blocks on a 'nomination basis'

The blocks are under Coal India but government still wants an international bid to take place

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It might be tough for Coal India to get coal bed methane (CBM) blocks without participating in the next round of bidding. The coal ministry has sent a proposal to the Ministry of Oil and Petroleum asking it to give CBM blocks on a nomination basis.

“These blocks are already in the control area of Coal India; it makes sense to drill them,” said S K Shrivastava, coal secretary, on the sidelines of a press conference. Coal India has a monopoly in coal production and it owns large tracts of coal mining land across the country. It also holds 19 identified CBM blocks.

The oil ministry is looking to seek international bids for all blocks, including the ones on land under Coal India’s control.

“These CBM blocks can be under the control area of Coal India, but the resource belongs to the nation. We plan to seek competitive bids. If we give away some blocks on nomination basis, the whole purpose of competitive bidding is gone,” said a senior official from the oil ministry.

On the other hand, private CBM drillers are not very happy about the proposal to allot these blocks without bidding to Coal India, as well. “Though decision on this is the government's prerogative, I think giving blocks away on nomination basis should not be the preferred route. The correct way would be the auction route to promote transparency. I do not see why public sector should be given preference,” said Yogendra K Modi, chairman & CEO, Great Eastern Energy Corporation.

GEECL is the largest CBM gas producer from its Raniganj (South) block at Asansol in West Bengal. At present, GEECL produces 0.57 million standard cubic metres a day (mscmd) from the block and plans to increase over a period of time. The company has drilled 150 wells and plans to drill 150 more wells in the Raniganj block over the next few years. Production is expected to rise to 3 mscmd when all 300 wells start production.

The senior oil ministry official, however, agreed there should be a consensus on drilling the blocks. “The blocks are already in areas where they are producing coal. To be able to possess, the land would be tough for the companies which win these blocks,” he added.

CBM blocks in India are awarded through separate bidding rounds. So far, four bidding rounds have taken place.

CBM is an eco-friendly natural gas, stored in coal seams, generated during the process of the coalification.

India has the third-largest proven coal reserves and is the fourth-largest coal producer in the world. India holds significant prospects for commercial recovery of CBM, estimated to be around 4.6 trillion cubic metres.