Oil majors sign CBM contracts

NEW DELHI JULY 26. India today joined a select group of countries that are exploiting coal bed methane (CBM) as a source of natural gas with the signing of five contracts for exploration and production of CBM.

The companies entering into contracts included Reliance Industries, Essar Oil, Oil and Natural Gas Corporation and Indian Oil Corporation. The five blocks where exploration will take place include two in Jharkhand, two in Madhya Pradesh and one in West Bengal.

The initial investment in these blocks is estimated at about Rs. 200 crores and further investments would then depend on the results of assessment of commerciality of available CBM.

The contracts were signed in the presence of the Petroleum Minister, Ram Naik, the Minister of State for Coal, Ravi Shankar Prasad, and the Minister of State for Petroleum, S. K. Gangwar.

Speaking on the occasion, Mr. Naik said CBM was found in coal bearing areas and production of CBM would provide a new source of natural gas to the country and would also make coal mining safer and reduce environmental hazards. The CBM resource base in the five blocks was estimated at about 235 billion cubic meters. CBM being a low pressure gas could be utilised locally for power generation, industry as well as domestic use and would help boost the local economy, he said.

Mr. Naik pointed out that by taking steps to explore and produce CBM, India has joined a select group of countries like the U.S., South Africa, Poland, Australia, Russia and the U.K. that are engaged in CBM operations.

The ONGC-IOC consortium signed contracts for Bokaro and North Karanpura blocks in Jharkhand while RIL entered into contracts for Sohagpur East and West CBM block in Madhya Pradesh. Essar Oil signed the contract for the prime East Raniganj block in West Bengal.

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