KOLKATA (miningweekly.com) - Having overcome inter-Ministerial wrangling, Indian major Coal India Limited (CIL) would be granted the right to explore for coalbed methane (CBM) at its coal assets.

The government has auctioned off 30 blocks for exploitation of CBM resources, but there was no clarity on the policy around simultaneous extraction of coal and CBM from the same block, or participation of private companies in CBM extraction.

According to an official in the Petroleum and Natural Gas Ministry, while differences between it and the Coal Ministry persisted, the decision to give CIL the right to extract coal and CBM from the same block had been taken as a ‘partial consensus’.

The Petroleum and Natural Gas Ministry favoured private sector participation in CBM extraction on the grounds that State-controlled CIL did not have the requisite expertise and would, in any case, have to seek private companies' help in exploration and production. This was, however, disputed by the Coal Ministry, which wanted CIL to have exclusive and full rights over blocks under CIL control.

Government officials pointed out that the differences over policy stemmed from the fact that the coal sector was under the administrative control of the Coal Ministry while gas was under the Petroleum and Natural Gas Ministry's control. Moreover, there was no clarity on whether participation of private companies in extraction of CBM from coal blocks held by CIL would violate the country’s coal nationalisation laws, which permitted coal exploitation only by government-owned companies, the official said.

The government was planning to put more CBM blocks up for auction, including 19 blocks held by CIL. But officials said that while the Petroleum and Natural Gas Ministry was keen for an international bidding to lure global companies into the sector, the domestic coal miner had sought blocks to be awarded to it through nomination process.

In the absence of any policy directive, the option of awarding a few blocks to CIL through the nomination route and putting others on the auction blocks, was being considered; however, the final decision would have to be taken by the Union Cabinet, the official said.

India, with the third-largest coal reserves in the world, at 293-billion tonnes, held significant potential for CBM exploitation - more so than shale gas - and according to the Directorate General of Hydrocarbons, the CBM resource was estimated at 4.6-trillion cubic meters.