CBM contracts to fetch $1 bn for Govt

New Delhi: The Government is expecting about $1 billion investment in exploration of gas trapped below the coal seams in nine areas, contracts for which were signed on Tuesday.

A consortium led by Anil Ambani Group companies RNRL and REL with GeoPetrol signed production sharing contracts for four Coal Bed Methane (CBM) blocks, where it committed to invest at least Rs 100 crore in first of the three phases of exploration.

Australia's Arrow Energy-led group, that include state-run gas firm GAIL (India) Ltd, committed $500-600 million investment in 20 years in exploration of CBM in its three blocks.

Coalgas Mart-Deep Industries joint venture signed the PSC for two blocks.

The Cabinet Committee on Economic Affairs had on September 29 awarded 10 Coal Bed Methane blocks, but contracts for only nine have been signed as the agreement for one block with BP of UK has not been firmed up, official sources said.

Speaking on the occasion, Petroleum Minister Murli Deora said before the signing of today's nine CBM contracts, 16 blocks had been awarded in two previous rounds of auction.

"Results in some of the blocks have exceeded our expectations and three operators have established in-place gas reserves of over six trillion cubic feet," he said.

"The first commercial production of CBM in the country is expected to commence in 2007," he said.

Later, a Reliance Natural Resources Ltd press release said the PSC was signed with Ministry of Petroleum and Natural Gas for exploration and production of Coal Bed Methane (CBM) in four blocks.

These blocks are - BS (4)-CBM-2005/III in Rajasthan, BS (5)-CBM-2005/III in Rajasthan, KG (E)-CBM-2005/III in Andhra Pradesh and SP (North)-CBM-2005/III in Madhya Pradesh.

"The consortium of RNRL, REL and Geopetrol International Inc with participating interests of 45 per cent, 45 per cent and 10 per cent respectively had submitted bids for all 10 CBM blocks offered by the government under the third round of bidding. With the award of four CBM blocks, RNRL has become the second largest acreage holder," the release said.

It further said Phase-I investment commitment for each block was in the range of Rs 25 to Rs 27 crore.