India's state-run Steel Authority of India Ltd. (SAIL) is said to be in talks with Oil and Natural Gas Corporation Ltd. (ONGC) to jointly explore coal-bed methane in coal blocks allocated to the steel major for captive consumption. SAIL is a steel-making company based in New Delhi, while ONGC is the country's biggest energy explorer.

Economic Times, quoting ONGC chairman Sudhir Vasudeva, said SAIL has approached his company for coal-bed methane projects. However, discussions are at a preliminary stage and the blocks were not yet been identified, Vasudeva added.

The use of coal-bed methane is part of SAIL's plan to reduce input costs. The steel maker is already using methane produced from an ONGC-operated block in the Indian state of Jharkhand, the report said.

SAIL chairman CS Verma told Economic Times that the two companies are exploring possibilities of further increasing the sourcing of coal-bed methane to SAIL with development of more gas fields by ONGC.

Coal-bed methane is an eco-friendly natural gas stored in coal seams. It is mainly used as an industrial fuel, the report said.