RIL to begin CBM production by FY16-end

Reliance Industries' domestic exploration and production segments could see an uptick with the company planning to begin production from its coal-bed methane (CBM) blocks in the next three months. In its financial presentation on the website, RIL stated that phase one development was nearing completion and the first gas was expected shortly. It plans to produce 3.5 million standard cubic meters per day of gas from the two Sohagpur blocks in the state. However, pricing could be an issue.

RIL, along with other private players Essar Oil and Great Eastern Energy Corporation, is seeking freedom to sell gas from their blocks at market price. CBM contracts allow sale of gas at arms-length price. But that freedom was taken away by the earlier government by bringing CBM gas under the purview of the gas utilisation policy, giving the pricing freedom to the government.

CBM projects by the private players will bring on stream around six million standard cubic meter per day (mscmd) up from the current 1.1 mscmd from GEECL’s Raniganj (South) and Essar Oil's Raniganj (East), which are the only two blocks under production.

RIL's subsidiary, Reliance Gas Pipelines, is laying a 312-km pipeline to transport the CBM gas produced from Shahdol in Madhya Pradesh to Phulpur near Allahabad in Uttar Pradesh. The pipeline is "expected to get commissioned by the March quarter of FY16," RIL said. RIL added that production from its Tapti field would stop sometime during the March quarter. Production from all these fields was 5.4 mscmd (but Tapti contributed only 0.2 msmcd) and 1.64 million barrels of oil.

Reliance Industries Limited (RIL)