US Funds Indian CBM

Indian coalbed methane explorer Prabha Energy has won a US Trade & Development Agency grant to carry out a feasibility study pertaining to developing CBM resources in India.

Prabha has selected Virginia based Advanced Resources International to carry out the feasibility study, USTDA said September 12. Work on the feasibility study is expected to begin this year.

“USTDA is excited to support Prabha Energy as it looks to develop an untapped energy resource,” said its regional director for south and southeast Asia, Henry Steingass. “As India develops its CBM resources, US companies can provide the equipment and expertise to help India unlock CBM’s potential.”

USTDA believes CBM may represent a new source of clean-burning natural gas to be used as fuel by the local industrial, transportation and power sectors.

Inconsistent government policies have frustrated India’s CBM production, despite its large reserves. In the 12-month period ending March 31 2017 production was just 0.564bn m³, according to the latest data from the oil ministry’s Petroleum Planning & Analysis Cell (PPAC). 

With the aim of reviving the stagnant sector, India’s Cabinet Committee on Economic Affairs, chaired by the prime minister Narendra Modi, in March allowed CBM producers to market and price the gas freely in the domestic market.

According to the government, while discovering the market price for arm’s length sales, the contractor has to ensure a fully transparent and competitive process for the sale of CBM. But it can also sell to an affiliate, in the event that a contractor cannot identify any third-party buyer. Royalty and other dues to the government, however, shall be payable on the basis of PPAC notified prices or selling prices, whichever is the higher.

There are just three companies producing CBM in India: GEECL, Essar, and Reliance.

Shardul Sharma