Coal-Bed Methane Boom: Reliance and Essar Surge as India Bets on Domestic Gas Reserves

Coal-Bed Methane Boom: Reliance and Essar Surge as India Bets on Domestic Gas Reserves​

Reliance Industries Ltd and Essar Group have emerged as the dominant bidders in the race for coal-bed methane (CBM) blocks. These two major conglomerates secured top positions across the 16 coal-bed methane blocks offered in consecutive bidding rounds, according to the Directorate General of Hydrocarbons (DGH).

The process involved two critical stages: the Special CBM Bid Round 2025 (for three areas) and the 2026 bidding round (for another 13 blocks). The successful bids for both rounds closed on March 5.

While state-owned Oil India Ltd bid for three blocks, India's largest oil and gas producer, ONGC, did not participate in this cycle of bidding.

Bidding Dynamics and Market Focus​

The DGH offered these blocks for the exploration and production of natural gas trapped within coal seams underground. The gas, known as CBM or coal seam gas, is highly valuable for power generation, industrial use, and even converted into CNG for vehicles and household kitchens.

The bidding areas, located in Category II and III basins, favor entities that commit to offering the most aggressive work program, specifically by drilling the largest number of wells.

Reliance demonstrated significant focus, bidding for three of the 13 blocks offered in the Special CBM Bid Round 2026. Meanwhile, Essar Oil and Gas Exploration and Production Ltd (EOGEPL) secured bids for three blocks from the 2026 round and two blocks from the 2025 round.

Key Wins and Competitive Highlights​

The bidding saw a mix of sole bidders and multiple contests. Reliance achieved sole bidding status for two blocks in Chhattisgarh and Odisha. These specific wins include the SR-ONHP (CBM)-2026/4 block in Mand-Raigarh coal field and the SR-ONHP(CBM)2026/5 block in IB Valley coal field.

In Telangana, a direct competition was noted for the PG-ONHP(CBM)-2026/5 block in the Godavari Valley coal field, where Reliance contended with EOGEPL. Conversely, EOGEPL was the sole bidder for the PG-ONHP(CBM)-2026/3 block in the same Godavari Valley.

Oil India Ltd took sole bidder status for the SR-ONHP(CBM)-2026/1 block in Singrauli coalfield of Madhya Pradesh. Furthermore, a competitive interest was observed between OIL and EOGEPL for another block in the Singrauli coalfield.

Strategic Importance of CBM to India's Energy Security​

CBM is increasingly viewed as a critical domestic resource to curb India's growing dependence on imported natural gas. India, the world's third-largest gas consumer, currently meets half of its demand through imports, including LNG.

This dependence exposes the country to volatile global prices and considerable supply risks, particularly as consumption rises across sectors like power and city gas distribution.

CBM offers a viable alternative because methane is naturally present in coal seams across major basins like Jharkhand, West Bengal, and Madhya Pradesh. This methodology leverages existing coal geology, which experts suggest could potentially lower geological exploration risks compared to conventional gas methods.

Future Potential and Government Policy Support​

The cumulative potential is substantial: the total prognosticated CBM resource across the 33 awarded blocks is estimated at 62.4 trillion cubic feet. To date, 9.9 Tcf has been established as Gas in Place (GIP).

The government has actively supported the sector by providing pricing and marketing freedom to CBM producers. Additionally, streamlining land and environmental clearances aims to accelerate investment and production nationwide.

Currently, the domestic CBM resource estimate stands at over 2-3 trillion cubic meters. This domestic focus is reinforced by the fact that Reliance already produces gas from two CBM blocks in Madhya Pradesh, while Essar and GEECL have started production from blocks in West Bengal.