Economic Times reported that oil ministry has asked the Rangarajan Committee to resolve the protracted coal bed methane pricing issue that could further delay commercial production of gas from blocks held by Essar Oil.

Government and industry officials said that the Rangarajan Panel, scheduled to meet in the third week of this month, is expected to examine pricing matters of domestically produced gas, including CBM. So far the committee had limited its focus on matters related to oil and gas blocks auctioned under new exploration licensing policy.

The ministry has asked the expert panel for its suggestion after it could not convince the committee of secretaries to resolve the issue, officials said. The ministry wants suggestions of CoS or the expert panel before taking the sensitive pricing matter to the cabinet for approval. The oil ministry has also asked the Prime Minister's Office to intervene so that CoS would take up the CBM pricing issue. The cabinet secretariat, which is empowered to constitute a CoS, encourages ministries to take decisions on matters pertaining to their expertise.

Official said that the CBM pricing issue has been referred to the Rangarajan panel as the oil ministry is in a fix because of wide difference between gas prices derived by Reliance and Essar. They added that Essar has discovered CBM price at USD 4.20 per unit while Reliance's market price is about USD 13 per unit.

a government official said requesting anonymity said that "It is not unusual that CBM prices have regional variations, depending on its proximity to consumers. CBM quantities are relatively small compared to natural gas produced from blocks such as Reliance-operated KG-D6.”

Source - Economic Times

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