Coal India Gets Government Nod to Produce CBM

State owned Coal India has been allowed by the Indian government to produce gas from coal seams.

The Ministry of Petroleum and Natural Gas on Tuesday said Coal India and its subsidiaries will be allowed to explore coal-bed methane (CBM) in mining leases they possess, reported Press Trust of India.

Until now the company was allowed to mine only coal from its mines or leases.

However, the government has set certain conditions which Coal India needs to adhere to. The company will not be allowed to "alienate CBM lease rights" and cannot involve a third party for CBM exploitation except central or state government owned units with experience in CBM mining lease. The majority stake shall remain with Coal India, Press Trust reported.

As per the order, Coal India will have to submit within 24 months of the grant of CBM mining lease, a field development plan (FDP) to the Directorate General of Hydrocarbons (DGH) and it would have to start production not later than the projected date in that plan.

While the government has so far awarded 33 blocks for exploration and exploitation of CBM, a majority of the gas bearing areas are under coal mining. There was no policy that allowed for simultaneous production of coal and CBM gas.

CIL holds about 80% of the CBM bearing areas and the move to grant it the rights to explore coal seam gas is aimed at expediting production of gas.