Ambani brothers could co-operate over CBM

It has been reported that Reliance Industries (RIL) and Reliance Power have held initial talks to jointly develop their adjoining Sohagpur coalbed methane (CBM) blocks. Executives of RIL and Reliance Power confirmed that the two companies had initiated discussions a few months ago to develop common infrastructure at the contiguous CBM blocks in Madhya Pradesh. But talks were preliminary and so far they have not made significant headway, they said.

Cash-rich energy major RIL is close to starting production from its Sohagpur CBM block but is locked in a dispute with the oil ministry over CBM pricing. The company has opposed a ministry directive giving Government the power to choose the customers with which it can negotiate prices – a constraint that the company says is a contractual violation that restricts its ability to recover its costs. RIL wants to use the pricing formula prevalent in LNG trade.

Reliance Power has drilled about a dozen exploration wells in its block and plans to enter next phase of drilling test wells to finalise the field development programme. The peak gas production from the three blocks is estimated at around 7 million m³/day.

India has world's fourth largest coal reserves, which are estimated to hold about 92 trillion ft³ of CBM.

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