India looks to open coalbed methane market to private players

The Indian Oil Ministry has intimated it will look to open up the country’s coalbed methane (CBM) market in a move to attract investment in the sector from private companies.

Until now, general Indian policy has been to only allow state-owned firm, Coal India Ltd to explore and produce CBM in its existing coal mines.

The Oil Ministry is now proposing to give license to other public and private sector firms to produce CBM from their existing mines, according to Business Standard.

The Oil Ministry hopes to capture as much CBM as possible from all available coal bearing areas. The ministry is moving the Indian Cabinet to bring all coal mining areas held not just by Coal India Ltd but other PSUs, joint ventures and private companies as well under this framework.

The would enable coal seams to be ‘degassed’ ahead of coal mining operations. The captured gas could then be put to commercial use, while helping India address the gas deficit currently facing the country.

Towards this, the ministry is proposing that all CBM rich coal seams, irrespective of depths, including areas planned for coal mining, be allowed to produce the fuel.

In addition to payment of royalty to respective state governments, coal companies would be required to pay a production level payment of 5%, they said.

The ministry is proposing that, where mining lease for extraction of coal has been granted, the rights for extraction of CBM should also be available with the operator.

For areas where a CBM exploration or mining licence has already been granted, The Ministry of Coal should refrain from allotting coal blocks in that area.

However, in cases where a coal mining lease has already been granted within an area where significant investments have been made by a CBM operator, and it is not possible to carry out simultaneous extraction of coal and gas, the CBM operations in and around the overlap area will be terminated.

If the coal mining operator intends to extract gas, it will takeover the assets of CBM operator and pay a fair value for the investment, sources said.

Sources said the Coal Ministry is opposed to allowing miners other than CIL for exploitation of CBM.

Before the December 2013 decision of the CCEA, rules and regulations prohibited coal mining firms from extracting CBM, as the policy did not allow for simultaneous extraction of CBM and coal.

CBM exploration and production was allowed only in pure coal-seam gas bearing blocks, which are auctioned. Since 2001, 33 CBM blocks have been awarded in four auction rounds.

Two CBM blocks to Oil and Natural Gas Corp (ONGC) and one to Great Eastern Energy Co Ltd have been awarded on a nomination basis.

Edited from various sources by Sam Dodson

Read the article online at: https://www.worldcoal.com/cbm/18112014/india-could-open-up-coalbed-methane-market-cbm146/