The oil ministry may seek the approval of Cabinet Committee of Economic Affairs on the long pending issue of coal bed methane (CBM) gas pricing of Reliance Industries and Essar Oil.

?A committee of secretaries is finalising the CBM pricing for the two companies and once its report is approved by the oil ministry a cabinet note would be moved,? a senior oil ministry official said on condition of anonymity.

Unlike gas, where government has finalised a uniorm pricing formula applicable for all Nelp blocks, CBM gas pricing may not be uniform with prices varying depending on the geography.

While Essar Oil has proposed $4.2/mmBtu price for their gas produced from their CBM block in West Bengal, Reliance has claimed a price of around $12-$13/mmBtu from their block. The wide differential in the prices of the two companies has forced the oil ministry to get expert view on the issue.

?The price of gas will be decided by the government. It may be possible that different prices are fixed for different companies. Their may not be any uniform price,? a senior DGH official said.

The petroleum ministry has approved a minimum well-head price for GEECL at $6.79/mmBtu for its CBM block in West Bengal. ?In CBM, base price is approved because the government wants to protect its royalty. Higher you sell, higher will be the royalty to the government. The government has provided a formula which allows deduction for transportation and compression,? Prashant Modi, president and chief operating officer of Great Eastern Energy Corporation Limited (GEECL), said in a written reply to FE.

In February, Reliance submitted its request for pricing of CBM gas from its block in Madhya Pradesh. Reliance pricing was based on the formula at 12.67% of price of JCC (Japan Customs-Cleared Crude) plus $ 0.26 per mmBtu from end-2014. Though the proposed formula and the price discovery mechanism has been rejected by the DGH.

In September 2011, Essar Oil submitted a proposal for pricing of gas produced from blocks ? SP (West)-CBM-2001/1 and SP (East) ? CBM-2001/1. Essar Oil has received it?s test approval for 25,000 scm from the oil ministry and has currently drilled 20 wells. It?s CBM output is expected to reach 3 million scm by 2014 and it plans to drill 500 wells.