India Allows Three Producers to Price CBM on Par With Conventional Gas

Indian government has approved proposals of three coal bed methane (CBM) operators to charge prices equivalent to other domestic natural gas once a new gas price formula is approved, Free Press Journal newspaper reported earlier this week.

Reliance Industries (RIL), however, has not been granted this approval as the government wants additional information from the company, Oil Minister Dharmendra Pradhan said.

Four companies namely Great Eastern Energy that owns Ranjiganj South block, Essar Oil that owns Raniganj East block, ONGC who operates Jharia block and Reliance Industries that owns Sohagpur East and West blocks, had sought approval for gas price formula for valuation of coal bed methane.

“The approval of Government of India has been issued for three contractors namely M/s GEECL, M/s Essar and ONGC. The proposal of RIL has been scrutinised and additional information has been sought,” the minister was quoted as saying by the newspaper.

In June, the newly elected Indian government postponed the planned hike in natural gas prices by three months to September-end. The government said it wants a "comprehensive" review to make a controversial pricing formula more palatable.

The previous government had approved pricing formula suggested by a panel headed by C Rangarajan. The new price regime was supposed to originally come into effect from April 1 but was deferred because of national elections in May.

The price of gas, according to this formula, comes to around $8.3 per million British thermal unit for April-June quarter, almost double the current price of $4.2.