Essar Oil & Gas has secured five new coal-bed methane (CBM) blocks across West Bengal, Madhya Pradesh and Telangana, expanding its exploration footprint by approximately 1,281 square kilometres. The newly awarded acreage contains an estimated 6.6 trillion cubic feet (TCF) of gas-in-place resources, according to the company. The contracts were signed on October 15, 2026, under the government’s Special CBM bidding rounds for 2025 and 2026, as India looks to develop more domestic natural gas resources.
The expansion builds on Essar’s established production operations in West Bengal’s Raniganj region, where the company says it produces around 950,000 standard cubic metres of gas per day. Two of the new blocks will expand its existing Raniganj East acreage, while another block strengthens its presence in Madhya Pradesh’s Singrauli basin and two blocks establish a foothold in Telangana’s Godavari Valley. The acquisition could support future production growth, although the estimated gas-in-place figure does not represent proven recoverable reserves or guarantee commercial output.
Key Takeaways
- Five new blocks: Essar Oil & Gas secured five CBM blocks under the government’s 2025 and 2026 special bidding rounds.
- Additional acreage: The awards add approximately 1,281 square kilometres across three states.
- Estimated resources: The blocks contain an estimated 6.6 TCF of gas in place.
- Raniganj expansion: Two West Bengal blocks will increase the company’s Raniganj East footprint from around 500 to 830 square kilometres.
- New geographic opportunities: The company has added a block in Singrauli, Madhya Pradesh, and two blocks in Telangana’s Godavari Valley.
- Existing production: Essar says its Raniganj operations produce approximately 950,000 standard cubic metres of gas daily, accounting for nearly half of India’s CBM output.
- Energy security: The expansion could support domestic gas supplies, but the pace of production will depend on exploration results, infrastructure and project economics.
What Are the Five Coal-Bed Methane Blocks?
The five blocks are spread across three states with different levels of existing CBM development. The West Bengal acreage is closest to Essar’s established production operations, while the Madhya Pradesh and Telangana blocks broaden its geographic footprint.
| State | Location | Number of blocks | Strategic significance |
|---|---|---|---|
| West Bengal | Raniganj region | 2 | Expands the existing Raniganj East operating area |
| Madhya Pradesh | Singrauli basin | 1 | Strengthens presence in an established CBM region |
| Telangana | Godavari Valley | 2 | Opens a new geographic area for the company |
| Total | Three states | 5 | 1,281 sq km of additional acreage |
Source: Essar Oil & Gas company announcement dated October 15, 2026.
The allocation gives Essar a combination of expansion opportunities near existing infrastructure and exploration opportunities in new areas. The company can potentially use its experience at Raniganj to inform development decisions elsewhere, although geology and reservoir behaviour can differ substantially between basins.
The formal signing of the contracts marks the award stage of the projects. It does not mean that all five blocks are already producing gas or that the entire estimated resource base can be extracted commercially.
Why the Raniganj Expansion Matters Most Immediately
Two of the new blocks are located in West Bengal’s Raniganj region and together cover approximately 330 square kilometres. They will expand Essar’s existing Raniganj East acreage from about 500 square kilometres to around 830 square kilometres.
The proximity of the new areas to the company’s operating asset is important because gas exploration and production require substantial supporting infrastructure. Existing wells, pipelines, processing facilities, technical teams and operational systems can potentially reduce the cost and complexity of developing nearby acreage.
Essar expects the expanded area to support an integrated CBM-producing field that could become India’s largest. This is a company expectation rather than an established outcome; achieving it will depend on the performance of the new blocks and the investment required to bring them into production.
Existing investment provides a foundation
Essar Oil & Gas says it has invested more than ₹6,000 crore in exploration and commercial development at Raniganj. The project has more than 454 commissioned wells and supporting infrastructure.
The company reports current production of approximately 950,000 standard cubic metres per day, equivalent to 0.95 million cubic metres daily. It estimates that this accounts for nearly 50% of India’s total CBM production.
That operating experience gives Essar a foundation for expanding the Raniganj area. However, drilling additional wells and connecting new acreage to existing facilities will still require capital, technical planning and evidence that the gas can be produced economically.
What Is Coal-Bed Methane and How Is It Extracted?
Coal-bed methane is natural gas trapped within coal seams. It consists primarily of methane and is classified as an unconventional gas resource because it is held within coal formations rather than in conventional reservoir structures.
CBM production typically involves drilling wells into coal seams and removing water to reduce pressure. As the pressure falls, methane can be released from the coal and brought to the surface.
The process differs from conventional natural gas production, where gas is generally extracted from porous rock formations that contain accumulated hydrocarbons. CBM projects depend on factors such as coal characteristics, permeability, gas content, water management and the rate at which gas can flow through the formation.
A block’s estimated gas-in-place resources represent the total gas believed to be present underground within the relevant area. Only a portion may be technically recoverable, and a further assessment is needed to establish what can be produced commercially.
That distinction is important for Essar’s newly awarded acreage. The reported 6.6 TCF figure signals potential resource scale, but it should not be interpreted as a confirmed reserve estimate, a production forecast or a guarantee of future revenue.
Singrauli and Godavari Valley Expand Essar’s Reach
Beyond West Bengal, the new awards give Essar opportunities to develop resources in two additional regions.
The Singrauli block strengthens its position in Madhya Pradesh, an established CBM area. The company’s experience in exploration and production may help it assess development options, although each block requires its own geological evaluation and investment planning.
The two blocks in Telangana’s Godavari Valley are particularly significant because they take Essar into a new CBM geography. Entering a new region allows the company to diversify its exploration portfolio, but it also introduces uncertainty about reservoir performance, the availability of infrastructure and the cost of commercial development.
Projects in new basins often require substantial early-stage work before production decisions can be made. This can include geological studies, seismic analysis where applicable, exploratory drilling, reservoir testing and assessments of pipeline access and gas-market demand.
The three-state footprint therefore gives Essar more options for future growth, while also creating a broader set of technical and capital-allocation decisions.
How the Deal Fits India’s Domestic Gas Strategy
India imports a substantial share of the natural gas it consumes. Domestic production can help reduce exposure to international supply disruptions and price volatility, although its impact depends on how much additional gas can be produced and delivered to consumers.
Coal-bed methane is one of several unconventional resources that India is seeking to develop. Other domestic gas sources include conventional fields, offshore projects and other exploration and production activities.
Natural gas is used in sectors such as fertiliser manufacturing, city gas distribution, industrial heating and power generation. Greater domestic supply could support these users, but gas availability alone does not determine affordability. Prices, transportation infrastructure, processing capacity and contractual arrangements also influence the market.
Essar has said it wants to contribute 5% of India’s total natural gas production by progressively developing its CBM portfolio and unlocking additional domestic resources. This is a company ambition, not a confirmed future production share.
The five new blocks could contribute to that objective over time if exploration and development prove successful. Their ultimate contribution will depend on recoverable resources, production rates, project costs and the timing of investment.
The Commercial Challenges Ahead
The award expands Essar’s exploration portfolio, but converting acreage into commercial production is a multi-stage process.
First, the company must understand the geology and determine how much of the estimated gas-in-place resource can be recovered. Second, it must establish the well design and operating methods suited to each reservoir. Third, it needs infrastructure to gather, process and transport the gas to customers.
The economics of CBM production can be sensitive to drilling costs, well productivity, water handling and gas prices. If a reservoir produces gas more slowly than expected, the time required to recover the investment may increase. If infrastructure is distant or market access is limited, transportation costs can further affect project returns.
Environmental management is another consideration. CBM development involves handling water brought to the surface during production, as well as managing drilling operations, land use and local environmental impacts. Responsible development requires appropriate approvals, monitoring and safeguards.
For Essar, proximity to the Raniganj operation may make the West Bengal expansion comparatively easier to integrate. The Singrauli and Godavari Valley blocks will require their own assessments before their commercial potential can be established.
What the Expansion Means for Essar Oil & Gas
The awards strengthen Essar’s position in India’s unconventional hydrocarbon sector by adding acreage across established and new regions. They also give the company a larger portfolio from which to identify future production opportunities.
The company can potentially spread technical expertise and operational experience across multiple projects. At the same time, it will need to prioritise investment according to geological prospects, development costs and expected returns.
The expansion should therefore be viewed as a step in building future production capacity, rather than an immediate increase in current gas output. The pace of development will depend on the results of exploration, regulatory requirements and the availability of capital.
For India’s energy sector, the significance lies in whether these awards ultimately translate into additional domestic gas supplies. Acreage and resource estimates are important early indicators, but actual production and delivery to customers will determine the wider economic impact.
The Bigger Picture
Essar Oil & Gas’s five new CBM blocks expand its footprint across West Bengal, Madhya Pradesh and Telangana, adding 1,281 square kilometres of acreage and an estimated 6.6 TCF of gas in place. The Raniganj expansion offers opportunities to use existing infrastructure, while Singrauli and the Godavari Valley broaden the company’s exploration options.
The awards also reflect India’s effort to develop domestic unconventional gas resources and reduce reliance on imported supplies. However, the distinction between gas in place and commercially recoverable gas remains critical. The real value of the expansion will depend on whether Essar can convert the newly awarded acreage into sustainable production at competitive costs.
Looking Ahead
The next phase will involve technical assessment, exploration and development planning for the five blocks. Essar will need to determine the recoverable potential of each area, establish the infrastructure required and prioritise investments based on reservoir performance and expected returns. The proximity of the Raniganj blocks to the existing field could help with integration, while the new regions will require additional evaluation.
Over time, the projects could strengthen domestic CBM production and contribute to Essar’s target of supplying 5% of India’s total natural gas production. That outcome is not guaranteed by the resource estimate alone. Exploration success, commercial recovery rates, environmental management and access to gas markets will determine how much of the estimated resource base becomes usable supply.
Frequently Asked Questions
1. How many CBM blocks has Essar Oil & Gas won?
Essar Oil & Gas has secured five new coal-bed methane blocks across West Bengal, Madhya Pradesh and Telangana under the government’s Special CBM bidding rounds for 2025 and 2026.
2. How much gas do the new blocks contain?
The five blocks have an estimated 6.6 trillion cubic feet of gas-in-place resources. This is an estimate of gas present underground, not a guarantee that the full amount is recoverable or commercially viable.
3. Where are the new Essar CBM blocks located?
Two are in West Bengal’s Raniganj region, one is in Madhya Pradesh’s Singrauli basin, and two are in Telangana’s Godavari Valley.
4. How much gas does Essar currently produce at Raniganj?
The company reports production of approximately 950,000 standard cubic metres per day, accounting for nearly half of India’s CBM output.
5. What is coal-bed methane used for?
CBM is natural gas that can be used in applications similar to other natural gas supplies, including industrial processes, fertiliser production, city gas distribution and power generation, subject to processing, infrastructure and market requirements.
6. Will the new blocks immediately increase India’s gas production?
No immediate increase is guaranteed. The blocks must undergo exploration and development, and commercial production will depend on recoverable resources, well performance, infrastructure and project economics.
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