Lok Sabha Question No. 130 (UNSTARRED), answered on 2018-07-18
Subject: Coal Bed Methane
Ministry: COAL
Asked by: T. RADHAKRISHNAN, VIJAY KUMAR S.R., GANESH SINGH, BIDYUT BARAN MAHATO, S. RAJENDRAN, KUNWAR HARIBANSH SINGH, SUDHEER GUPTA, ASHOK SHANKARRAO CHAVAN, GAJANAN CHANDRAKANT KIRTIKAR

## GOVERNMENT OF INDIA

## MINISTRY OF COAL

## LOK SABHA UNSTARRED QUESTION NO. 130

## TO BE ANSWERED ON 18.07.2018

Coal Bed Methane

130. SHRI T. RADHAKRISHNAN:

SHRI S.R. VIJAYAKUMAR:

SHRI GANESH SINGH:

SHRI BIDYUT BARAN MAHATO:

SHRI S. RAJENDRAN:

KUNWAR HARIBANSH SINGH:

SHRI SUDHEER GUPTA:

SHRI ASHOK SHANKARRAO CHAVAN:

SHRI GAJANAN KIRTIKAR:

Will the MINISTER OF COAL be pleased to state :

- (a) whether the Government has approved expansion of exploration and production o India's Coal Bed Methane (CBM) from areas allotted to State-run Coal India Limit (CIL) and if so, the details thereof;
- (b) whether the said decision is in line with the Government's initiatives of 'Ease o Business' and will expedite the exploration and exploitation of CBM, enhance availability of natural gas and reduce the gap in demand and supply of natural gas the details of the increased development activities for exploration and exploit CBM gas reserves in-and-around the block along with details of creation of employme opportunities in CBM operations and in the industries;
- (c) the guidelines in place for production of Coal Bed Methane;
- (d) the estimated reserved of coal bed methane in different parts of the country, Sta wise;
- (e) whether the Government has conducted any survey for identification of production coal bed methane in the country and if so, the number of areas proposed to be ident for the production of coal bed methane in the near future; and
- (f) the other steps taken/being taken by the Government to enhance the production of c bed methane and reduce the demand supply gap in the country?

## ANSWER

## MINISTER OF RAILWAYS, COAL, FINANCE AND CORPORATE AFFAIRS ( SHRI PIYUSH GOYAL)

(a)& (b) : Yes Madam. Government had notified consolidated terms and conditions on r i November, 2015, for grant of exploration and exploitation rights to Coal India Ltd. and its subsidiaries from coal bearing areas for which they possess mining lease for Government has further simplified the procedure and re-notified the terms and condition 08.05.2018 (Annexure-I).

The said decision is in line with the Government's initiatives of 'Ease of Doing Busine will expedite the exploration and exploitation of CBM, enhance the availability of natur and reduce the gap in demand and supply of natural gas. Presently, development activitie exploration and exploitation of CBM gas reserves in-and-around the coal blocks of CIL ( in the command area of BCCL & ECL) are under active consideration.

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(c): CBM being Natural Gas is explored and exploited under the provisions of Oil Fi (Regulation and Development) Act 1948 (ORD Act 1948) and Petroleum & Natural Gas Rules 1959 (P&NG Rules 1959) administered by Ministry of Petroleum & Natural Gas (MoP&NG). In order to harness CBM potential in the country, the Government of Ind formulated CBM Policy in 1997. Government has further simplified the procedure and notified the terms and conditions on 08.05.2018.

Further, in order to give a thrust to expedite development of CBM blocks in India and r impediments, Govt. of India has notified policy on early monetization of CBM on 11.04.2 wherein CBM Operators are allowed to sell CBM at market determined prices at arm length.(Annexure-II)

(d):

|                    |                            |         | Prognosticated Resource (in TCF)   | Established CBM CBM Reserves TCF)   |
|--------------------|----------------------------|---------|------------------------------------|-------------------------------------|
| 2                  | Rajasthan                  |  359.62 | 12.7                               | 0                                   |
| 3                  | Gujarat                    |  351.13 | 12.4                               | 0                                   |
| 4                  | Odisha                     |  243.52 | 8.6                                | 0                                   |
| 5                  | Chhattisgarh               |  240.69 | 8.5                                | 0                                   |
| 6                  | Madhya Pradesh             |  218.04 | 7.7                                | 3.65                                |
| 7                  | West Bengal                |  218.04 | 7.7                                | 4.33                                |
| 8                  | Tamil Nadu                 |  104.77 | 3.7                                | 0                                   |
| 9                  | Telangana & Andhra Pradesh |   99.11 | 3.5                                | 0                                   |
| 10                 | Maharashtra                |   33.98 | 1.2                                | 0                                   |
|                    | North East                 |    8.5  |                                    |                                     |
| Total CBM Resource | Total CBM Resource         | 2599.48 |                                    |                                     |

(e): CBM Blocks were carved out by DGH in close interaction with Ministry of Coal, GSI & CMPDI. Under CBM policy, 4 rounds of CBM biddings were accomplished resulting in award of 33 CBM blocks which covers 16, 613 Sq Km out of the total available coal beari areas for CBM exploration of 26, 000 Sq Km.

- (f) : A series of efforts have been initiated to give a thrust to expedite developm CBM blocks in India. They are given below:
- i.  Government has formulated Co-development agreement for exploration and exploitation of CBM & Coal in the same area with a view to resolve the issue overlapping between coal blocks and CBM Blocks;
- ii.  Govt. of India has also notified policy on early monetization of CBM on 11.04.201 wherein CBM Operators are allowed to sell CBM at market determined prices at arm's length transaction, thereby giving them freedom from CBM Pricing and Allocation Policy of Govt. of India.

40 to 1,1 ,k - 10-330N/99

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REGD. NO.   0. L.-33004/99

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3, 74- 14171i

EXTRAORDINARY

°MIT 1

PART 1-Sect1on 1

1 1T- NwrT ·9 , i,"

## PUBLISHED BY AUTHORITY

"44..    172]

No. 1.72]

11, 2018/ 4?

114.q  21, 1940

NEW   DELHI, FRIDAY, MAY II,  20 IS/VALSAKHA   21, 1940

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## MINISTRY OF PETROLEUM AND NATURAL GAS NOTIFICATION

New Delhi, the 8 ° May, 2018

F. No. 19018/12/2015-ONG-L-In partial modification of Coal Bed Methane (CBM) Policy Notification N0.0-120 i 1 / 1 /97/ONG.DO.TV dated 19.07.1997 and in supersession of the notification no.  19018/1 2/ 2 015-ONG-I dated 3` d November, 2015 the Government of India exercising the powers conferred under section (12) of the Oilfields (Regulation and Development) Act, 1948 (53 of 1948) hereby notifies the consolidated terms and conditions for grant of exploration and exploitation rig to Coal India Limited (CIL) and its subsidiaries from coal bearing areas for which they posses mining lease for coal, as hereunder:

1. The right . vestedimining lease with CIL and its subsidiaries for extraction of coal under lhe Coal Bearing Areas (Acquisition & Development) Act, 1957 'or Coal Mines (Nationalization) Act or Coking Coal Mines (Nationalisation) Act, 1972 Or any other act so specified, would be deemed to be a mining lease granted under the .PNG Rules 1959 for exploration and exploitation of C.BM. CIL and its subsidiaries need not apply for separate grant of license/lease under the PNG Rules, 1959 for extraction of CBM, for such areas.
- ii. As a lease holder CIE and its subsidiaries will comply with the ORI) Act 1948 and P&NG rules 1959 for CBM operations in all such blocks/ fields;
- iii. Lessee( s) would comply with existing policy of Government of India for utilization and pricing of natural gas.
- iv. Lessee(s) will be required to pay royalty and requisite fees, levies and taxes as applicable from time to time to State/Central Government at prevailing rates at par with payments which are required to be made for natural gas and as revised from time to time.
- v. CIL and its subsidiaries will, at present, require to pay royalty @ 10 % ad valorem sale value at the well head to concerned State Government, a fixed one time signature bonus equivalent to US$ 0.3 Million in Indian Rupees on the date of signing of the CBM Contract and also Production Level Payment (PLP) on the CBM production @ 2.5% of the Sale Value of the CBM produced, to Central Government.
- vi. Exemption  . from payment of customs duty on imports under SI no. 404 of notification no. 59 /2017 --Customs dated 30th June, 2017. other relevant provisions therein and any

other notifications issued in this regard from time to time by the government will b applicable.

- vii.  Income tax will be payable as per the income Tax Act, 1961.
- viii.  Annual coal mining plans will include details of the area deemed to be mining lease for CBM operation, committed work programme and target for production of .CBM during the year, and the same will be incorporated in the M.OU between Ministry of Coal (MOC) and the lessee.
- ix. CIL and its subsidiaries will identify the area for CBM operation and sign the contrac with the Ministry of Petroleum and Natural Gas. Within 24 months of signing of contract, the lessee shall submit Field Development Plan (EDP) to DGH for information and record, under intimation to the MOC. FDP so submitted shall have the approval of the Board of the lessee.
- x. The time period for submission of FOP may be extended by 12 months by MoP&NG on a case to case basis with sufficient justifications.
5. xi, For delay in submission of appraisal plan and FOP beyond 36 months, the lessee will be liable to pay a penalty of Rs. One lakh per month.
- xii. The lessee shall start production not later than the projected date in the FOR For dela in production; lessee would be liable to pay' a penalty of Rs. One lakh per month of delay.
- xiii. Equity participation for CBM exploitation shall be limited to Central or State PSUs with experience in CBM operations with the majority share holding remaining with the Lessee. This shall not restrict the engagement of experienced technical developers or service contractors, whether domestic or foreign, for CBM extraction by the Lessee.
- xiv.  Relinquishment of CBM ruining lease will be co-terminus with coal lease.
- xv. CBM areas covered under coal mining lease area will be utilized by the lessee in a manner so as to facilitate extraction of CBM prior to coal mining operations or simultaneously with coal mining operations to optimally develop and conserve CBM.
2. All statutory requirements relating to Environment, Safety, etc. shall be complied with by th Lessee in accordance with the provisions of the relevant statutes.

Dl WAKAR NATH MISRA' ft. Secy.

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## NOTIFICATION

## Policy Framework for Early Monetization of Coal Bed IVIethane(CBM)

No. 0-19018/7/2016/ONG-I To develop alternate sources of `natural gas including Coal. Bed Metha (CBM) and promoting gas economy, Government has decided to-provide marketing and .prieing freedom f Coal Bed Methane -(CBM), and streamline the operational issues, The Government of India. hereby noti the Policy Framework for Early Monetization of CBM Gas as hereunder:

## Marketing and Pricing Freedom

- Li It has. been decided to provide marketing and pricing freedom to the Contractors of CBM blo sell the CBM at Arm's Length Price in the domestic market. While discovering the market price fo Length Sales, the Contractor has to ensure a fully transparent and competitive process for sale of the objective:that the best possible price is realized, to the benefit of all parties to this.Cont restrictive commercial practices. An advertisement / Notice. Inviting Tender (NIT) /'e- Tender notified widely by the Contractor, in at least one local language daily newspaper and one English national daily newspaper and'other suitable electronic media, mentioning inter-alia the quality a of CBM available for, sale. Detailed information on the evaluation criteria to be used along salient features of sale agreement to be executed by the buyer shall also be made known and =at lea time is to be allowed to ensure maximum participation of all likely buyers in this process. The i regarding the final agreement reached with the buyer shall be hosted on the Contractor's / website and also communicated to. DGH / Government.
- 1.2 In the event of market discovered price being less than the price notified 1?y the Petroleum Analysis Cell (PPAC) under the New Domestic Natural Gas Pricing Guidelines, 2014, the royalt Production. Level Payment (PLP) shall be paid on the basis of the latter.
- 1.3 On notification of these guidelines, the New Domestic Gas Pricing Guidelines, 2014 and th Utilization Policy announced earlier from time to time shall not be applicable to CBM gas.

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To be published in the Gazette of India Part I, Section I)

## Government of India

## Ministry of Petroleutn and Natural Gas

Shastri Inman, New Delhi Date: 11 th   April, 2017

- 1.4 These provisions regarding marketing and pricing freedom along with the minimum price determining the 'Government take' shall also be applicable to the blocks where pricing formula/b been approved earlier by the Government. Any order issued earlier not in consonance with this pol be treated as withdrawn.
- 1.5 Sale of CBI to any Affiliate of the Contractor is permitted, in the event the Contract identify any buyer following the procedure as stipulated in para, 1.1. The information regarding t for sales to Affiliate and the final agreement reached with the Affiliate shall be hosted on the Operator's website and also communicated to DGHTGovernment.

## 2. Contractual Issues

Director General, Direotorate General of HydrocarbOns (DG,DGH) is empowered for condoning the delays in notice periods, annual work program and budgets and to approve the excusable regarding clearances from State and Central Government The. DG, DGH will dispose such cases withi time-limits below:

- 2.1 Entry into subsequent Phase, after paying cost of Unfinished Wfinimum Work Programme (MWP)

Contractor is allowed to carry out MWP of second phase of exploration` after paying the cost of u work program of previous phase of exploration period to the Government.

- 2.2 Condoning delays in submissi©n of notice for entering into next phase or for the Extension Phase in Phase-1 to Phase-III

DGH is empowered to condone delays UP to a period of 90 days for giving notice for entering into phase, for reasons to be recorded by the Contraetor. However, such condonation shall not be con Extensions of P hue..

## 2.3 Condoning delays in submission of Annual Work Program and Budge

DGH is empowered to condone delays up to a period 090 days for submission of Annual Work Program Budget from which reasons am to be recorded by the Contractor. However, such condonation shall construed as extension of a phase.

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7'

' 4

2.4 Excusable delay in development phase due to land ,acquisition / force majeure issues or an other such matter beyond the control Of Operator \_

DGH is empowered to approve the excusable delays, without set off from subsequent Phases, development phasedue to Land Acquisition I Force Majeure condition QI  any other such matter beyond the, control Of Operator after confirming demonstrable- delays,

## 2.5 Reduction in minimum work programme

DGI-.1 is empowered to reduce Minimum Work Programme (MWP). in proportion to the dijtittp.at area if contract area is reduced by Government for any reason. If the Contractor decides :not to accept any reduction in contract area, the contractor would be permitted to exercise exit option from the con without payment of-CQSI of Unfinished Work Programme (COUWP).

## 2.6 Effective date of the contract

If delay in grant of Petroleurn Exploration License . (PEL) exceeds tw.0 (2) years from the State Governments in any Block, the Contractor if exercises exit option from the CBM Block, will be permitt to exit vvithotit paying cost of unfinished work program.

## 2.7 Non-grant or delayed permission of clearances by State Government and Central Government.

In cases of inordinate delays in granting clearances i.e. beyond two (2) years in any block, the Contr exercises is exit option, will be permitted to exit from the contract without paying Cost of Unfinishe Programme. DGH is empowered to review and examine such cases and approve exit option exercised by the Contractor from the CBM Contract

## 2.8 Cakulation of Cost of Unfinished Work Program

For Calculation of Cost of Unfinished Work Program, a fixed amount of USD 025 Million per coreh.o and USD 0.6 Million per test well as well as pilot well shall be considered as Cost of Unfinished Work Program irrespective of depth and will be uniformly applicable for all CBM Blocks. In ca prospectivity observed in CBM block after drilling of core holes, then it is not required to wells in the block. In such cases, DGH is authorized to waive off the cost of test/pilot wells d technical requirement. 'Other works' and tests/studies as indicated in Article 5 of the Cont MWP' shall, not be considered for calculation of cost of unfinished work program of Phase-I and

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the value of 'Other works' has been factored in =the computation of COIAT for Core hole and Tes and Pilot

- 2.9 Relaxation of Notice Period for submission: as per :CBM Contract

DGR is empowered to review and examine delays i i submission -of various notice periods i Contracts.

- 2.10 Extended Role for Empowered Committee of Secretaries (ECS) for resolution of o erationa issues in implementation of CBM Contracts.

The role of ECS comprising of Secretary (Petroleum & Natural. Gas), Finance Secretary, Secretary ( and Secretary (Law) is extended for approving the matters relating to .CBM blocks as and When ref ECS.

- 3.0 This Notification shall be effective immediately.

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(Amar Nath) Joint Secretary to the Government of India

To,

The Manager

Government Of India Press

Faridabad

## ORDER

Ordered that a copy of this notification be communicated to all the State Government/Union Administration, Loic Sabha Secretariat and the concerned Ministries and Department of the Govern India.

Ordered also that the notification be published in the Gazette of India fOr information.

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(Amar Nath) Joint Secretary to the Government of India

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