UPDATE 1-France's Hollande rules out shale gas exploration

PARIS, July 14 Sun Jul 14, 2013 8:52am EDT

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PARIS, July 14 (Reuters) - French President Francois Hollande ruled out exploration for shale gas during his presidency on Sunday, dousing hopes that a ban on hydraulic fracturing could be reviewed following a legal challenge by a U.S. firm.

France's top court said this week it will examine the challenge to the ban by Schuepbach Energy, which held two exploration permits that were cancelled when the law was passed in 2011.

Industry Minister Arnaud Montebourg stirred debate when he suggested creating a state-backed company to examine exploration techniques. But he was promptly overruled by Prime Minister Jean-Marc Ayrault.

"As long as I am president, there will be no exploration for shale gas in France," Hollande told France 2 TV in a live interview after Bastille Day celebrations.

The International Energy Agency has named France as a European country with some of the most plentiful underground reserves of shale gas.

But Hollande's government, which comprises members of the Greens Party, has kept in place the 2011 ban and said it should remain in effect due to concerns that hydraulic fracturing can pollute underground water sources.

Scheupbach Energy challenged the ban in the local court of Cergy-Pontoise near Paris, which forwarded the case to France's highest administrative court, which then passed it on to the Constitutional Council.

"The debate on shale gas has gone on for too long," Hollande said.

(Reporting by Nicholas Vinocur; Editing by Astrid Wendlandt and William Hardy)

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