The proposal comes as India tries to extract extra worth from its large coal useful resource whereas decreasing dependence on imported fuel and chemical feedstocks. For Reliance, it’s a placing new transfer into coal assets, though the corporate isn’t proposing to turn out to be a traditional coal miner.
Additionally Learn: RIL proposes Rs 2.73 lakh crore investment for India’s first coal gasification complex in Andhra
However can Reliance make underground coal gasification work at business scale in Indian circumstances and, if it does, will the ensuing fuel and chemical substances can materially scale back India’s vulnerability to exterior vitality shocks.
What Reliance has proposed
Reliance has secured the Chintalapudi and Recherla coal blocks in Andhra Pradesh by way of a coal ministry e-auction and has proposed growing an built-in Underground Coal Gasification, or UCG, advanced in Eluru district, as per an ET report primarily based on sources. RIL didn’t reply to ET’s e-mail requesting remark.
The potential funding is pegged at Rs 2.73 lakh crore over 30 years, however it’s conditional on exploration establishing that the mission is technically and commercially viable.
The proposal has three phases. Exploration and pilot work from Q3 2026 to This fall 2027 would contain as much as Rs 3,000 crore. If that succeeds, Reliance proposes Rs 1.2 lakh crore of improvement spending throughout 2028-30 and Rs 1.5 lakh crore within the manufacturing part from 2030 onwards. These are figures within the proposal submitted to the Andhra Pradesh authorities, as reported by ET.The 2 blocks are giant. Chintalapudi covers about 3,000 acres and is estimated to comprise 904.94 million tonnes of G-12 grade coal. Recherla covers 5,500 acres and has an estimated 2,225.67 million tonnes of G-13 coal. The estimates quantity to three.13 billion tonnes. Officers advised ET the deposits lie greater than half a kilometre underground.
The largest financial significance lies within the firm extracting fuel from the coal with out typical mining.
Additionally Learn: Coal gasification key to build long-term resilience against global energy shocks: Experts
How underground coal gasification works
In typical coal gasification, coal is mined and delivered to the floor earlier than being transformed into fuel. Underground coal gasification (UCG) turns the coal seam itself into the gasification reactor.
Wells are drilled into the underground coal seam. An oxidising agent reminiscent of air, oxygen or steam is injected by way of one properly. The coal is partially combusted and undergoes chemical reactions underground. One other properly brings the ensuing fuel to the floor. The primary product is syngas, or synthesis fuel. It’s not the identical as pure fuel. Syngas usually accommodates hydrogen and carbon monoxide together with various portions of methane and carbon dioxide. Its significance lies in what will be produced from it.
Syngas will be processed into hydrogen, methanol, ammonia, artificial pure fuel and artificial fuels. Authorities paperwork additionally determine purposes in fertiliser manufacturing and as decreasing fuel for steelmaking. For instance, syngas will be shifted to extend its hydrogen content material. That hydrogen can be utilized to make ammonia, which is a significant fertiliser feedstock. Syngas can be transformed into methanol. By methanation, it will probably produce artificial pure fuel, or SNG, which is actually methane-rich fuel that may substitute for pure fuel in appropriate purposes.
This implies Reliance doesn’t essentially should promote the fuel as a gasoline. It may use the syngas as a platform for producing higher-value industrial merchandise.
Why this issues to India
India’s dependence on imported fuel is substantial. The federal government mentioned in Could 2026 that greater than half of India’s LNG, round 20% of its urea, nearly all of its ammonia and round 80-90% of its methanol necessities are met by way of imports. That creates a number of factors of vulnerability.
Home gasification may doubtlessly scale back LNG demand by way of SNG manufacturing. It may present hydrogen for ammonia and fertiliser manufacturing. Methanol manufacturing may substitute for imports. Syngas-derived decreasing fuel may additionally discover industrial purposes. The worth is due to this fact broader than electrical energy era. Coal is being transformed right into a gaseous feedstock that may enter a number of industrial chains. India’s import invoice for key merchandise that coal gasification may doubtlessly substitute, together with LNG, urea, ammonium nitrate, ammonia, coking coal and methanol, was roughly Rs 2.77 lakh crore in FY2025, as per a authorities launch.
For Reliance, this downstream flexibility is especially necessary as a result of the corporate already has giant refining and petrochemical operations. Its curiosity is doubtlessly much less about turning into a coal producer and extra about gaining one other home supply of carbon and vitality feedstock.
India’s coal-gasification mission
India has mentioned coal gasification for many years, however authorities coverage has turn out to be way more aggressive in recent times. In January 2024, the Union authorities accepted an Rs 8,500 crore monetary incentive scheme for coal and lignite gasification tasks. The scheme covers authorities PSUs, non-public firms and demonstration tasks.
The nationwide goal is to achieve 100 million tonnes of coal gasification by 2030. The sector is rising however stays properly in need of that ambition. The federal government has been supporting tasks involving Coal India, BHEL, GAIL, BPCL, Talcher Fertilisers and personal firms.
In Could 2026, the Cupboard accepted a a lot bigger Rs 37,500 crore scheme for floor coal and lignite gasification tasks. The federal government expects the scheme to help tasks utilizing about 75 million tonnes of coal and lignite and supply incentives of as much as 20% of eligible plant and equipment prices, topic to scheme limits.
That is necessary for Reliance, however there might be a catch. The Rs 37,500 crore scheme is particularly for floor coal and lignite gasification. Reliance is proposing underground coal gasification. Due to this fact, it shouldn’t be assumed that RIL will robotically qualify for the brand new surface-gasification subsidy.
UCG does, nonetheless, have separate coverage help. The federal government has had a UCG coverage since 2016 and has launched provisions that encourage gasification of coal in business mining. In April 2026, the Ministry of Coal introduced the primary tranche of coal mine improvement agreements carrying embedded UCG provisions.
The federal government has additionally offered a 50% revenue-share rebate for coal used for gasification beneath specified circumstances. That might be economically related to Reliance, relying on the phrases relevant to its blocks and the eventual mission configuration.
So the coverage atmosphere is clearly supportive of gasification, however Reliance’s UCG mission is probably not handled as a direct beneficiary of each incentive created for floor gasification.
How large may Reliance’s contribution be?
Reliance has not disclosed how a lot coal it intends to gasify annually or how a lot syngas it expects to supply. Due to this fact, there isn’t any firm manufacturing forecast but. However the scale will be illustrated.
If the whole 3.13 billion tonnes of underground coal have been gasified evenly over 30 years, the typical can be about 104 million tonnes of coal a yr. That’s roughly equal to India’s total 100-MT nationwide gasification goal for 2030.
That doesn’t imply Reliance will gasify 104 MT a yr. It’s merely the mathematical implication of spreading the whole geological estimate over the proposed mission life.
A extra conservative situation reveals why even partial utilisation may matter. If 10% of the estimated useful resource have been gasified over 30 years, the typical can be about 10.4 MTPA, or roughly 10% of India’s 100-MT goal. At 25% utilisation, it could be about 26 MTPA, equal to 26% of the nationwide goal.
These are simply situations, and never Reliance steerage. The precise quantity will rely on exploration, restoration charges, gasification efficiency and economics.
The largest threat is underground
UCG’s attraction can also be its greatest uncertainty. The coal is greater than 600 metres deep, which makes typical mining troublesome or uneconomic. However turning that underground seam right into a managed gasifier could create its personal technical issues. The coal seam wants appropriate thickness, continuity and permeability. The encompassing geology issues. Groundwater circumstances matter. Faults and fractures can have an effect on the gasification cavity. Operators should additionally management fuel leakage and potential subsidence. Analysis on UCG has recognized groundwater contamination, fuel leakage and subsidence as necessary dangers. Business-scale deployment stays extremely site-specific.
That’s the reason Reliance’s first Rs 3,000 crore is extra necessary than the headline Rs 2.73 lakh crore determine.
The corporate first must show that it will probably create and management the underground response and produce a sufficiently constant syngas stream at an appropriate value. If that works, the bigger improvement funding turns into credible. If it doesn’t, a lot of the proposed Rs 2.73 lakh crore could by no means be spent.
Can Ambani’s underground wager save India from vitality shocks?
India’s vitality demand is anticipated to rise as industrialisation and family consumption enhance. Renewables can provide an growing share of electrical energy, however they can not eradicate the necessity for molecules utilized in fertilisers, chemical substances, refining, metal and different industrial processes. Meaning India will proceed to want fuel and gas-derived merchandise whilst its energy system turns into cleaner.
Coal gasification presents one potential home supply. If UCG produces economically aggressive syngas, India may use it to make SNG and scale back some LNG imports. Hydrogen from syngas may help home ammonia manufacturing. Methanol may exchange imports. Industrial fuel may help metal and chemical manufacturing.
It could not make India utterly self-sufficient. Nor would coal gasification eradicate the nation’s publicity to worldwide vitality costs. Nevertheless it may present a further home supply of important molecules. That might be a giant issue throughout geopolitical disruptions. A rustic importing LNG, ammonia and methanol is uncovered not simply to commodity costs but additionally to transport constraints, foreign money actions and disruptions to main commerce routes.
The federal government’s personal rationale for coal gasification is partly primarily based on decreasing these import dependencies. Its Could 2026 announcement explicitly linked the programme to decrease dependence on imported LNG, urea, ammonia and methanol.
