<div>Modi would not disclose his costs of production, but asked about a figure below $2 per mmBtu he said that was "in the right ball park<br /><br />Indian coal bed methane (CBM) pioneer Yogendra Modi believes the country's huge coal fields could provide 10 percent of its fast-growing gas needs within 20 years, displacing some potentially costly imports.<br /><br />His company, London-listed Great Eastern Energy Corp Ltd (GEECL), is set to deliver its first annual net profit this year as it ramps up CBM output ahead of a share sale in its home country.<br /><br />GEECL makes its money persuading industrialists in West Bengal to convert their generators from heavy fuel oil, or furnace oil, to natural gas. The gas is fed to their doorsteps through GEECL's proprietary pipelines from rich virgin coal deposits less than 60 kilometres away.<br /><br />The selling point? It's half the price of furnace oil and other liquid oil fuels, still the second most important industrial energy source in the country behind coal.<br /><br />Modi offers his customers gas at $12 per million British thermal units (mmBtu) delivered via its own 100 kilometre pipeline network to the steel works and food processors of Asansol, Raniganj and Durgapur.<br /><br />"Some industry is even setting up in West Bengal specifically to take advantage of our gas," Modi told Reuters in an interview. Conversion costs can be recovered in less than a month, he said, and can result in fewer clean-up stoppages due to the cleaner-burning nature of gas.<br /><br />Modi would not disclose his costs of production, but asked about a figure below $2 per mmBtu he said that was "in the right ball park".<br /><br /><strong>The Drag Of Fixed Prices</strong><br />GEECL has been drilling for coal bed methane (CBM) since 2006, and unlike many other gas suppliers, who are obliged to sell at a fixed low price to the power and fertilizer industries, it has a government contract allowing it to charge market prices that are some three times higher.<br /><br />It will remain a small player, and India's CBM fields are too small to interest big corporations, but Modi believes his localised, integrated West Bengal model can be replicated to great effect.<br /><br />Government data predicts Indian imports of Liquefied Natural Gas (LNG) will multiply five-fold to over 10 billion cubic feet a day by 2022 when it will satisfy half the country's predicted gas demand.<br /><br />Yet India, the third largest coal producer in the world, could become the number four producer of CBM, according to a 2011 study in the International Journal of Chemical Engineering and Applications.<br /><br />The gas price restrictions that experts say are holding back domestic gas output growth are under review as part of a government re-think of gas policy.<br /><br />Although GEECL can already charge free market prices, Modi worries that continued price restrictions will delay development of local resources and leave the country increasingly dependent on LNG imports and gas potentially piped in from nearby Pakistan, Bangladesh or Myanmar.<br /><br />(Reuters)<br /> </div>
