India prepares for shale gas auction

March 25, 2013 at 2:12 PM
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NEW DELHI, March 25 (UPI) -- India is preparing to launch its first auction of shale natural gas blocks, a government official said.

Indian Oil Minister M Veerappa Moily said Saturday he expects the government to finalize its policy for shale gas development in 10-15 days, Press Trust of India reports.

The U.S. Energy Information Administration estimates that India has shale gas reserves of 290 trillion cubic feet, of which 63 tcf is recoverable. That would be enough to meet India's natural gas demand for 33 years, says the country's Petroleum Ministry.

An unnamed source familiar with India's shale gas sector told Daily News and Analysis that allocation of shale blocks is likely to begin in June.

Six basins have been identified as potentially holding shale gas: Cambay in Gujarat; Assam-Arakan in the northeast; Gondawana in central India; KG onshore in Andhra Pradesh, Cauvery onshore and the Indo Gangatic basins.

Moily said India's shale gas policy will be designed to create an investor-friendly environment.

"Already we have taken a decision to fast track approvals for exploration projects by reducing the time taken from 36 months to 18 months," he said.

The new shale policy aims to target experienced oil and gas companies, with three to five years of operational expertise likely to be mandatory, petroleum ministry officials said in a Business Today report.

The Indian government plans to shift from a profit-sharing to a revenue-sharing formula for shale gas projects to attract investors, they said.

Furthermore, the government is considering amending mining rules that date to 1959 to allow the simultaneous exploration of more than one type of fuel in oil and gas blocks. That would give first right of refusal to operators of conventional gas blocks or other fuels such as coal in which shale gas might exist.

"Eventually, multiple operatorship in production areas will have to be introduced in case the original operator is not willing to develop shale gas," said Avinash Chandra, former director general of the Directorate of Hydrocarbons, which formulates the exploration policy for the petroleum ministry.

Challenges to India's shale development include land acquisition issues and environmental concerns.

"The extraction process requires large contiguous tracts of land, as well as plenty of water supply, which might present a problem in a country like India," says Vandana Hari of Platts Asia office.

The oil minister said he has formed a committee charged with cutting India's dependence on oil imports -- currently as much as 79 percent of its oil needs.

I see import dependence coming down by 50 per cent by 2020 and by 75 percent in 2025. By 2030, we should be self- reliant," Moily said.

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