25 March 2013, News Wires – India plans to unveil its shale gas policy within the next two weeks as it seeks to exploit unconventional resources to fuel its expanding economy and cut subsidies, according to the country’s oil minister Veerappa Moily.
India, the world’s fourth biggest oil consumer, wants to quickly tap resources to cut its import bill and rein in a widening current account deficit.
“This (shale gas) will be a game changer,” Reuters quoted Moily as saying on Sunday. He added that the cabinet would consider the policy within the next fortnight.
India lags China in tapping its shale resources. China recently announced winners for its second shale gas blocks’ auction and has set an ambitious target to unlock potentially huge unconventional gas resources trapped in its rocks.
According to Reuters, China is aiming to pump 6.5 billion cubic metres of shale gas in 2015 to cut dependence on polluting coal and imported gas.
A lack of a policy framework and resource estimates at home have led to Indian companies like Reliance Industries, Gail India and Oil India turning their focus to shale gas assets overseas.
Rather than auctioning blocks under the new policy, India may ask contractors of the existing 254 blocks, awarded under various licensing rounds, to consider shale gas exploration, oil secretary Vivek Rae said.
“We cannot offer existing blocks for shale gas exploration to other companies. However, in future we may have a single round and companies will be allowed to commercially exploit whatever they think is more profitable,” Reuters quoted Rae as saying.
Moily said in order to spur investment in its gas sector and to make many mature producing fields profitable, India would consider suggestions from a government panel on gas pricing in a couple of days.
Falling local gas output, mainly by the Reliance-operated deep-water D6 block off India’s east coast, has affected gas-based power plants in a country where peak power shortages at times run over 15%.
Local gas could cost as much as $8 to $8.50 per million British thermal units if the panel’s suggestions are accepted, Rae said. This is almost double the current $4.2 per mBtu.
Higher gas prices may stoke inflation and hit power and fertiliser companies which buy the bulk of the gas sold at government-fixed rates, Reuters added.