Budget 2015-16: Govt says preparing cabinet note to boost CBM exploitation

Proposed amendment to allow exploration of CBM from areas under coal mining lease allotted to private and public firms

The government is preparing a detailed note for the Cabinet Committee on Economic Affairs (CCEA) on boosting exploitation and production of coal bed methane (CBM) reserves, according to the Budget documents presented in Parliament on Saturday.

“A comprehensive note for CCEA to seek amendment of the CBM policy is under preparation,” the government informed in the Implementation of Budget Announcements document, adding the amendments would address all the issues currently impacting exploitation of CBM blocks.


Finance Minister Arun Jaitley had said in his Budget speech in July last year that the government intended to accelerate production and exploitation of CBM reserves and explore the possibility of using modern technology to revive old or closed wells. The amendment being sought would allow exploration and exploitation of CBM from areas under coal mining leases allotted to companies in the public and private space. Also, the contractors would be allowed to sell gas based on price bidding without following any allocation priority.

Through the amended CBM policy, the government also wants to simplify the existing contracts to eliminate micro-management of operations and put in place a workable mechanism for resolving the issue of overlap of CBM blocks with coal, oil or gas acreages.

CBM is largely methane gas trapped in between coal seams, a valuable energy source that must be harnessed before mining. Otherwise, the gas escapes in the atmosphere and gets wasted. India has 92 trillion cubic feet of CBM reserves, spread over 26,000 sq km of coal-bearing area.

CBM blocks were offered through international competitive bidding for exploration and production for the first time in May 2001. So far, the government has awarded 33 CBM blocks under four rounds of bidding to state, private and joint venture companies. In addition, two blocks were awarded on nomination and another through the Foreign Investment Promotion Board route.

These blocks are in the states of Andhra Pradesh, Assam, Chhattisgarh, Gujarat, Jharkhand, Madhya Pradesh, Maharashtra, Odisha Rajasthan, Tamil Nadu and West Bengal. Commercial production of CBM commenced  from July 2007 in the Raniganj (South) block in West Bengal, operated by Great Eastern Energy Corporation.

The Raniganj (South) block is currently producing around 0.35 million standard cubic metres a day (mscmd). Two other blocks are also producing gas — Raniganj (East), operated by Essar Oil and producing 0.22 mscmd, and Jharia, operated by Oil and Natural Gas Corp and producing 6,200 standard cubic metres a day.