CBM gas marketing freedom is around the corner

Vol 20, PW 4 (03 Nov 16) People & Policy

India's CBM sector is hardly booming with only four active players left after sole foreign operator Dart Energy exited last year.

But Reliance, Essar, Great Eastern and ONGC will be pleased the government is planning a boost for the sector with its new CBM policy that will give operators gas marketing freedom for the first time. Oil ministry sources tell this report they are expecting words of wisdom on a draft cabinet note on the CBM policy next month (November) from NITI Aayog, formerly the Planning Commission, and the law, finance and fertiliser ministries.

Also expected are comments from the department of chemicals and petrochemicals which will be interested in taking CBM supplies for factories. "This Note was prepared in September," says a ministry source.

"Once all comments are received the new policy will be fine-tuned and sent to the cabinet for approval." Under the new policy, operators will be free to sell gas to an "affiliate" company or entity as long as it is on an 'arms length' basis, i.e.

both parties are independent and on an equal footing. Gas produced from CBM fields will be sold in line with government guidelines in force since October 2014 where the domestic gas price is fixed every six months.

From October 2016 to March 2017 the price is $2.5/mmbtu on a Gross Calorific Value basis.

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