Top sector for foreign direct investment in India

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Coal-bed methane contracts are similar in principle to exploration and production concessions in the oil and gas industry.

Coal-bed methane exploration and recovery

Points to be noted:

  • Coal-bed methane (CBM) is a clean burning fuel for domestic and industrial uses, and its extraction reduces explosion hazards in underground coal mines.

  • India is endowed with huge reserves of bituminous coal of Paleozoic and Tertiary ages within the CBM window at depths of nearly 250-1200 metres.

  • Lack of data on producible reserves of CBM, gas content, reservoir saturation and permeability has prevented full exploitation of the resource.

  • India wants foreign and domestic private companies for the exploration and commercial exploitation of CBM resources at some of the underground coal mines.

  • Contracts that will be awarded will be similar to the "concession" concept in oil and gas exploration. Coal-bearing areas will be leased to the successful bidders and they will have to explore and test-drill.

  • If recovery and commercial exploitation of the CBM gas in these areas ultimately prove viable, the exploring firms will be free to construct pipelines and sell the gas to consumers or they may set up gas-based power plants.

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