(Releads with details of policy, context)
NEW DELHI, Sept 24 India has approved a policy
to allow state-owned companies to start exploration for shale
oil and gas as the world's fourth-biggest energy consumer moves
slowly to seek alternatives to expensive oil imports.
India and China have struggled to get into the global race
for shale resources, which has followed a boom in shale gas
output in the United States and has held out the hope of
abundant and cheap domestic energy.
While China faces problems of costs and complexity that have
stalled progress in exploration, India's government until now
has not organised a framework for even initial investigations.
On Tuesday, the government agreed on a policy that will
allow national oil companies to search for shale reserves on
acreage already awarded to them.
India could be sitting on as much as 96 trillion cubic feet
(tcf) of recoverable shale gas reserves, equivalent to about 26
years of its gas demand, according to the U.S. Energy
That would be a treasure trove for Asia's third-largest
economy, which is beset by energy shortages that make power cuts
common and fetter its industrial growth. Imports account for a
large share of its energy supplies and strain its finances.
The policy marks a first step and covers only acreage in the
hands of state-run explorers Oil and Natural Gas Corp (ONGC)
and Oil India Ltd, which were handed out
when India first started a push to produce oil and gas.
Of about 356 blocks held by ONGC and Oil India, India's
upstream regulator has said 176 could hold shale resources.
Contracts for these areas were awarded with a broad remit to
look for petroleum, which was interpreted to include
unconventional resources. The new policy effectively confirms
But the wording of contracts for blocks awarded later to
companies such as Reliance Industries, BG and
Cairn India specifies activity related to natural gas
and oil. That has been interpreted as excluding unconventional
energy, and the policy does not address these areas.
The oil ministry is proposing a uniform licence for future
acreage to cover oil, gas and unconventional resources and has
asked for comments from companies before Oct. 15.
While waiting for India to work out a policy on
unconventional resources, Indian companies including Oil India,
GAIL (India) and privately owned Reliance Industries
have bought up shale assets overseas to help obtain
the expertise needed for shale deposits back home.
(Reporting by Nigam Prusty; Writing by Jo Winterbottom; editing
by Jane Baird)