India's CBM Output Up 44%

India’s coalbed methane production in the 12-month period ending March 31 2017 was 0.564bn m3, up 44% year on year, according to latest data from the oil ministry’s Petroleum Planning & Analysis Cell (PPAC). That compares with production of 0.392bn m³ in the 12-month period ending 1Q2016.

This augurs well for the government which is trying to revive the under-performing sector and boost supply of domestically produced gas.

Indian oil minister Dharmendra Pradhan has said that the government is trying not only to raise the share of gas in the country's energy mix but also to boost output of domestic gas in order to reduce dependence on imports.

Indian oil minister Pradhan (Credit: Indian oil ministry)

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. Such producers have also been permitted to sell gas to any 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.

Currently, there are three companies producing CBM in India: GEECL, Essar, and Reliance; the latter started production last month.  

However, PPAC informed that gross natural gas production for the 12-month period to March 2017 was 1.1% lower year on year at 31.89bn m³. India's gross gas production was thus the lowest production of the last four years, spurring a rise in LNG imports.

Shardul Sharma