India offers 15 CBM blocks for auction

The Indian government on September 22 launched the bidding round for 15 coalbed methane (CBM) blocks.

The offer comes with the open acreage licensing programme (OALP), where the government’s revenue share is capped at 50%. The 15 blocks are spread over the states of West Bengal, Jharkand, Chattishgarh, Madhya Pradesh, Odisha, and Maharashtra.

The government has so far awarded 33 blocks for extracting CBM but only a handful are operational. At present CBM is produced by state-owned ONGC and private companies Essar, Reliance and GEECL.

The government will hold a pre-bid conference on the auctions on October 22, and the bid submission window will be open between January 20, 2022 and February 20, 2022. Winners will be eligible to pay concessional royalty rates if commercial production starts within four years from the effective date of the contract.

Despite having one of the largest coal reserves in the world, India’s CBM sector has suffered from the lack of a policy framework, which the present government has tried to correct to some extent in recent years. 

In order to enable the realisation of prospective hydrocarbon reserves in the existing contract areas which otherwise would remain unexplored and unexploited, the government tweaked the rules in 2018. They now permit exploration and exploitation of all types of hydrocarbons including shale gas resources under the existing CBM contracts. Also, the government has ushered in reform in the shape of pricing and marketing freedom and the revenue sharing model.