Indian Government to Discuss Pricing Issues with CBM Explorers

Indian petroleum ministry will meet with ONGC, Reliance Industries (RIL), Essar Oil and Great Eastern Energy Corporation (GEECL) on November 1 to discuss pricing issues related to coal bed methane exploration, Financial Express newspaper reported Wednesday.

These companies have told the government that getting new CBM blocks into production is not economically viable at prevailing domestic prices.

In the last meeting, one of the private players said that commencing CBM output is viable only at a gas price of around $8/mmBtu, Financial Express reported, adding that this, however, may not be granted, as imported spot LNG is now available at around $6/mmBtu.

According to industry watchers, one of the options for CBM players is to sell gas at market-determined prices.

The pricing of the gas is one of the crucial issues faced by the explorers. The price of natural gas, based on a formula approved in October last year, would further reduce to $4.15-$4.20/mmBtu from October 1 against $5.18/mmBtu now.