Gas price revision, shale policy on govt agenda

The government would also come up with a final draft on shale gas exploration policy in the next 15 days

Petroleum Minister M Verappa Moily has said his ministry would send a note on its recommendations on a revision in domestic natural gas prices to an empowered group of ministers within a fortnight.

The recommendations are based on a report by a committee headed by C Rangarajan. The committee had suggested an increase in gas prices, based on a formula of average gas prices in other markets and the netback of imported liquefied natural gas prices. The ministry has already received the response of various stakeholders on the committee’s suggestions.

The government would also come up with a final draft on the shale gas exploration policy within 15 days, Moily said. It is expected the first round of shale gas block auctions would be conducted by the end of this year. Unlike the current system in which oil and gas blocks are allotted by the government in return for a share in production after costs have been retrieved, shale gas rights are likely to be allotted according to the revenue share offered to the government.

Shale gas is natural gas trapped in sedimentary rocks (shale formations) below the earth’s surface. Though production of shale gas has gained momentum in North America, it is yet to be produced in India, though initial studies indicate its presence in Cambay, Gujarat, Assam-Arakan in the Northeast, Gondawana in central India, Krishna Godavari in Andhra Pradesh, Cauvery onshore and the Indo-Gangetic basins. Moily said an expert committee under Vijay Kelkar had been formed to suggest a road map to cut India’s dependence on oil imports.

Currently, India imports 79 per cent of its oil needs. The ministry wants to cut this to 50 per cent by 2020.

“We have already taken a decision to fast-track approvals for exploration projects by reducing the time from 36 months to 18 months,” Moily said.

He added at the next meeting of the Cabinet Committee on Investment, 31 proposals from the sector would be taken up.

At the first meeting, three proposals were cleared, while the second meeting cleared another seven.