Reliance Industries Ltd [Get Quote] plans to set up a coal-bed methane plant in Madhya Pradesh with an estimated investment of Rs 2,500 crore (Rs 25 billion).

The company is in talks with the state government and the project is expected to be completed by 2008.

According to sources close to the development, the location of the plant would be in one of the special economic zones near RIL's CBM assets in Sohagpur. There are three new SEZs have been proposed in the state.

RIL officials refused to comment on the development. It is learnt that the US-based Chevron Corporation, RIL's partner in Reliance Petroleum [Get Quote] project at Jamnagar, is also likely to join hands with the biggest private company in the project.

Reliance has established 1.69 tcf of CBM reserves in Sohagpur (East) block in Madhya Pradesh and 1.96 tcf in Sohagpur (West). Reliance has 5 CBM blocks covering an area of about 4000 sq km spanning over Madhya Pradesh, Chattisgarh and Rajasthan.

Over the last one year, the company has drilled 12 information wells and 10 production test wells in the Sohagpur blocks. Industry sources said the commercial production of methane gas from the blocks would commence by 2008.

"While the cost of the project might go beyond the stipulated amount as the technology for methane gas production is expensive," they added.

"The exploration in CBM blocks of RIL is progressing as per plan. Business plan for CBM usage and transportation is being developed," sources said.

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