India to open new coal fields for gas exploration

New Delhi: Director General of Hydrocarbon (DGH) V K Sibal has said that India will offer for bidding new coal fields for the exploitation of methane gas lying before the coal seams, coal bed methane or CBM, by the year-end, as it prepares to embark on an 'open acreage' system for oil and gas blocks.

Coal bed methane is being viewed as a viable means for bridging India's mammoth energy deficit, as the cumulative availability of 91 million standard cubic meters per day of gas in India caters to barely half the demand. The first gas production from a CBM block has already commenced, and a huge change is expected with areas awarded to Reliance Industries and ONGC start production in about a year.

Speaking to the media, Sibal said that the government could offer fewer than 10 coal bed methane (CBM) blocks in the fourth round of bidding, by end of 2008. Till now, India has had three international bid rounds for CBM blocks, which have attracted global companies such as firm BP Plc and Santos of Australia.

Talking about the response to the recently concluded seventh round of bidding for oil and gas under the new exploration licensing policy (NELP), Sibal said the response was exciting, as the DGH received four bids per block. He said that was very good when compared to the 1.5 bid per block that Libya gets, or three bids per block in NELP-VI.

Sibal also said that the DGH was setting up a national data repository to host geological information of all basins and fields in India. Once in place, the repository will help the country to graduate to an open acreage system, where companies would be able to identify blocks or areas they would like to drill by themselves, as opposed to the present system where the DGH asks them to bid for pre-assigned blocks.

Reports indicate that an open acreage system would envisage greater interest in exploration from Western oil companies who have thus far stayed away on account of doubts about the quality of blocks offered, and other taxation related issues.

Sibal said that the open acreage system and NELP-VIII could come out simultaneously sometime during the second half of 2009-10 fiscal year.