Reliance to commence work on new coal project in Andhra Pradesh from January

Reliance Industries Limited (RIL) is set to commence its activities in the underground coal gasification (UCG) sector in Andhra Pradesh's Eluru district from next January. According to a report by BusinessLine, the company will begin coal exploration activities in this region. This move follows the commercial coal mine bidding rounds called by the Ministry of Coal earlier this year.

Underground coal gasification (UCG) is a revolutionary approach to coal utilisation. In this method, there is no need for traditional surface mining. Instead, in this process, coal is converted into synthetic gas right under the ground, i.e., in situ within the coal seam. This technology will change the way coal is utilised.

This UCG project will utilise coal resources from the Chintalapudi and Recherla blocks. However, work in both blocks will not commence simultaneously. The first phase of activities will begin from the Chintalapudi block. The company aims to complete its pilot project by mid-2028 by running both exploration and pilot work concurrently.

The entire project will be implemented in three distinct phases. During the exploration and pilot phase, the company will make an initial investment of up to ₹3,000 crore. If the results of this pilot project are robust and prove to be commercially viable, work will be undertaken on a new investment proposal based on requirements, sources stated.

For Reliance, the coal sector has not traditionally been a mainstay in its portfolio, but this strategic shift has been taken inspired by clear mandates from the company's top-level management. The company's primary objective is to secure cheap energy sources and create a new 'Jamnagar' on the east coast. Through this strategy, the company seeks to increase its dominance in the energy sector.

The foundation for this project was laid in April 2026, when the Ministry of Coal entered into production and development agreements with successful bidders under the 14th round of commercial auctions. This was India's first commercial coal trench to include provisions for UCG. In this auction, Reliance secured the Recherla and Chintalapudi Sector A1 mines.

For the implementation of the project, Reliance plans to use Controlled Retracting Injection Point (CRIP) gasification technology. Additionally, the company has prepared solutions for resource and grid integration. To meet heavy water requirements and ensure local sources are not overburdened, Reliance will establish a desalination plant at Machilipatnam in Krishna district. Machilipatnam is a popular coastal area.

For power infrastructure, the company will initially purchase electricity from the state grid to run the pilot. However, once production begins at full scale, the company will build a dedicated captive power plant. It is still early to determine the final pricing for the produced synthetic gas, but according to sources, the company will prefer to maintain a very competitive pricing structure.

By entering the UCG sector, Reliance aims to leverage its extensive experience in oil and gas exploration as well as the coalbed methane sector. Reliance's main refinery and petrochemical complex is operational in Jamnagar, West India.