Indian CBM Players May Have to Reduce Price

With the announcement of new gas price regime in India, coal bed methane (CBM) producers would have to bring down the price in line with the formula.

Based on the recommendations of the Rangarajan panel, the government had in June decided on a uniform pricing formula for all domestic gas, which is expected to work out to $8.4 a unit when it is implemented in April 2014.

For conventional gas, this would be a near doubling of price, though for CBM producers it could mean a controlled pricing regime, according to financial daily Business Standard.

CBM producers like Essar Oil and Great Eastern Energy Corporation Ltd (GEECL) are charging as much as $10-14 a million British thermal unit (mBtu) for gas from their CBM blocks in West Bengal, Business Standard said.

While Essar Oil is producing about 0.1 million standard cubic metres a day (mscmd), GEECL is producing 0.57 mscmd from the Raniganj (South) block in Asansol in the state.