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Coal India to scout for global CBM technology, production partner

12th April 2018

By: Ajoy K Das

Creamer Media Correspondent

     

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KOLKATA (miningweekly.com) – With India’s Cabinet Committee for Economic Affairs (CCEA) on Wednesday liberalising rules for coalbed methane (CBM), Coal India Limited (CIL) will shortly start scouting for global technology and production partners to extract the gas from coal blocks that it holds.

While detailed search plans are still to be worked out, CIL is likely to be open to various options, including joint ventures (JVs) with foreign CBM technology suppliers and developers or pure-play developers to extract gas from its coal blocks without involving technology transfers, sources say.

The CCEA, the government’s apex economic policy making body, relaxed rules for CIL to develop CBM from coal blocks held by its various subsidiaries without having to go by rules pertaining to petroleum and natural gas.

In 2015, CIL was granted the freedom to explore and develop CBM from coal blocks, but its foray into natural gas ended up in limbo owing to rules pertaining to petroleum and natural gas, which stipulated that the miner would need to apply for a fresh mining lease for the very same coal block held by it for extraction of CBM.

In a further relaxation of previous rules, CIL will now be free to involve third parties in exploration and extraction of CBM. The previous norms laid down by Petroleum and Natural Gas - that if CIL was to extract any hydrocarbons from its coal blocks through JVs, an equity stake could only be offered to Indian government-owned companies, with CIL holding a majority stake - have now been liberalised, officials add.

Sources say that CIL could explore options for a public-private-partnership model to develop CBM extraction at five of its coal blocks in the eastern province of Jharkhand, estimated to hold reserves of one-trillion cubic feet of gas.

India’s production of CBM in 2016/17 was recorded at 565-million standard cubic meters (mmscm) against 393 mmscm in the previous financial year, a growth of 44%. However this was lower than the government’s projection of achieving production of 1 449 mmscm set for 2016/17.

The relaxation of norms for CIL followed the government’s policy last year incentivising CBM producers by permitting them marketing and pricing freedom, and allowing them to sell CBM at arm’s length price in the domestic market.

“The contractor, while discovering the market price for arm’s length sales has to ensure a fully transparent and competitive process for the sale of CBM with the objective that the best possible price is realized for the gas without any restrictive commercial practice,” the official policy statement last year stated.

Edited by Mariaan Webb
Creamer Media Senior Deputy Editor Online

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