* Private, foreign firms have to wait
* State firms have green light to drill for shale gas
* Policy for others to take at least three months
By Nidhi Verma
NEW DELHI, Aug 14 India will take at least three
months more to draw up a policy framework for shale gas
exploration that would allow both private domestic and foreign
firms to begin drilling for the fuel, two oil ministry sources
said on Wednesday.
India has a chronic power supply shortage and yet many
gas-fired electricity plants stand idle as the country lacks the
fuel to supply them, or the infrastructure and cash for
expensive imports. Shale gas supplies could eventually help meet
demand, but India has been slow to open up the sector.
The country could be sitting on as much as 96 trillion cubic
feet (tcf) of recoverable shale gas reserves, the U.S. Energy
Information Administration estimates, equivalent to around 26
years of the country's gas demand.
India's cabinet will soon approve a policy for shale gas
exploration, initially allowing state oil companies holding
India's oldest contracts to drill for shale. That would give
state-run explorers Oil and Natural Gas Corp and Oil
India Ltd a headstart, although neither has yet to
show much appetite for drilling for shale.
Of the 356 blocks the two companies hold, India's upstream
regulator has said 176 of them possibly hold shale resources.
These contracts were awarded when India first started a push
to find and produce oil and gas after it got independence from
Britain in 1947.
The old contracts refer to activity related to exploration
and output of petroleum, which India's government has
interpreted as a broad enough term to cover unconventional
energy such as shale.
The wording of new contracts for blocks awarded to companies
such as Reliance Industries, BG and Cairn India
, specifies activity related to natural gas and oil.
The Indian government has interpreted this as excluding
It is unclear how the government would resolve the issue. It
is also unclear if the government would open existing blocks to
bidding from companies who want to drill for shale.
BUILDING SHALE EXPERTISE OVERSEAS
Gas demand in the country is expected to jump to 473 million
cubic metres a day (mmscmd) by 2016/17 from 286 mmscmd in
India is eager to bring in global energy expertise to help
it unlock resources and cut import dependency. It will link
local gas prices to global indexes from April 2014 in an effort
to incentivise and attract producers and importers.
Reliance Industries, GAIL (India), Oil India and
Indian Oil Corp have bought stakes in shale gas assets
overseas to help build the expertise needed to pump gas from
deposits back home.
ONGC signed a preliminary agreement last year with
ConocoPhillips to exploit shale gas reserves, but is
unlikely to be able to use the technical expertise of the
Indian rules do not permit equity participation in these
particular blocks and multinationals are reluctant to be just
service contractors, said an ONGC official.
"For (these) blocks we have to rely on consultants and
service contractors for drilling," said the ONGC official.