Reliance to start selling gas from coal beds
Reliance Industries, owned by billionaire Mukesh Ambani, would start selling coal-bed methane from its central India block next month after the government allowed producers freedom to set prices, people close to the matter said.
The company would begin with daily sales volumes of 400,000m³ of gas from coal seams in Sohagpur block in Madhya Pradesh state and gradually increase the volumes, said the people, who asked not to be identified, citing company rules. Reliance had sought bids from potential buyers to be submitted by April 24, they said.
With this, Reliance becomes the third supplier of gas produced from coal seams after Great Eastern Energy and Essar Oil. In March, India’s federal government gave marketing and pricing freedom to producers of coal-bed methane to sell the fuel within the country as it seeks to attract investment to boost production. The country wants to increase the share of natural gas in its energy mix from the current 6.5% to 15% by 2020.
GAS PRICING
Reliance has appointed Crisil Risk and Infrastructure Solutions, a unit of Crisil Limited, to decide on the selling price for the gas. Reliance would supply gas to the winning bidders for two months, starting on May 1, the people said.
Great Eastern Energy, the first to start coal-bed methane production in India, sold the fuel at an average price of $10.05 a unit during April to December 2016.
Reliance’s production from the block comes after about 15 years of winning the rights. The company started test production during April to June 2016, according to its website.
In January, the Mumbaibased company said it was nearing completion of the first phase of its coal-bed methane project and was testing a pipeline built to push the gas into the national grid.
The Shadol-Phulpur pipeline would allow Reliance to sell the gas from the block to customers along its 312km route and to those on Gail India’s HaziraVijaipur-Jagdishpur pipeline, the people said.
Tushar Pania, spokesman for Reliance Industries, did not respond to an e-mail from Bloomberg seeking comment.
India has coal-bed methane resources of 3-trillion cubic metres, according to the oil ministry.