Essar Seeks $4.2 mmBtu for its CBM Gas

Essar Energy expects to get $4.2 per million British thermal unit for gas coming from its Raniganj coal bed methane block and has asked for government approval regarding the same. This  would make it the cheapest gas to be extracted from India’s coal beds.

A report in Mint newspaper said that the price matches the government-mandated price for Reliance Industries Ltd’s (RIL) KG-D6 gas. The price is also at a significant discount to what other CBM gas producers like RIL are reportedly seeking.

Earlier this month Press Trust of India reported that RIL received more than 70 bids for gas from its Sohagpur block in Madhya Pradesh, which will produce 3.5 million standard cubic metres of gas a day (mscmd) by end-2014.

Since the government has not announced its decision in either case, it is unclear if it will allow differential pricing or align the prices for different CBM blocks.

Essar Energy, which has the largest CBM acreage in the country with about 10 trillion cu. ft of gas resources across its five blocks, produces 22,000 standard cubic metres a day (scmd) from its block.