Govt offers 15 blocks in 2021 coal bed methane auctions

By: |
September 23, 2021 3:30 AM

The government will hold a pre-bid conference on the auctions on October 22, and the bid submission window will be open between January 20, 2022 and February 20, 2022.

Winners will be eligible to pay concessional royalty rates if commercial production is commenced within four years from the effective date of contract.Winners will be eligible to pay concessional royalty rates if commercial production is commenced within four years from the effective date of contract.

The Union government on Wednesday launched the special bid round 2021 for coal bed methane (CBM), offering 15 blocks spread across approximately 8,458 square kilometres. The auctions will be conducted according to the latest revenue-sharing terms of the Open Acreage Licensing Programme (OALP), where the government’s revenue share is capped at 50%. CBM is natural gas contained in coal, consisting primarily of methane.

The government will hold a pre-bid conference on the auctions on October 22, and the bid submission window will be open between January 20, 2022 and February 20, 2022. Among the CBM blocks offered, five are in Madhya Pradesh, three in Chhattisgarh, two each in Jharkhand, Maharashtra and Odisha and one in West Bengal. No revenue will have to be shared with the government till ‘windfall gain’ — when revenue from the contract area exceeds $2.5 billion in a financial year — accrues to the contractor.

The winning bidder will have full marketing and pricing freedom to sell CBM on ‘Arm’s Length Basis’, and prices will have to be discovered through competitive bidding. No export of the product will be allowed and there will be no allocation of the fuel by the government. Winners will be eligible to pay concessional royalty rates if commercial production is commenced within four years from the effective date of contract.

The prognosticated CBM resources in in 12 states of the country are about 92 trillion cubic feet. Till date, four rounds of CBM bidding rounds have been implemented by Union petroleum and natural gas ministry, resulting in the award of 33 CBM blocks which covered 16,613 square kilometer.

Out of this, contracts for 18 blocks have either been relinquished are under relinquishment by the operators, mostly on account of poor CBM potential. CBM in the country are currently produced by ONGC, Reliance, Essar Oil and GEECL. More than 229 million standard cubic metres of CBM has been produced in the country in April-July, 2021 period.

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