Shale gas exploration policy in one month: Moily

Govt is planning to launch its first auction of shale gas block by 2013-end

India will unveil a shale gas exploration policy in a month as it looks to exploit unconventional hydrocarbon resource to meet its growing energy needs.

"We have received comments on the draft shale gas exploration policy we had floated. We are now in the process of putting out a note for the consideration of the Cabinet and hopefully in a months time we will be able to announce the shale gas policy," Oil Minister M Veerappa Moily told reporters here.

The government is planning to launch its first auction of shale gas block by 2013-end on terms that are likely to be remarkably different from those offered in bid rounds for oil and gas blocks.

Shale gas or natural gas trapped in sedimentary rocks (shale formations) below the earth's surface, is the new focus area in the US, Canada and China as an alternative to conventional oil and gas for meeting growing energy needs.

As per the available data, six basins—Cambay (in Gujarat), Assam-Arakan (in the North-East), Gondawana (in central India), KG onshore (in Andhra Pradesh), Cauvery onshore and Indo Gangatic basins, hold shale gas potential.

The Directorate General of Hydrocarbons (DGH), the Oil Ministry's technical arm, has proposed to offer areas for exploration shale gas on royalty and production-linked payments to the government.

Also, the Oil Ministry is working on a new policy for exploiting gas lying below coal seams, called Coal-Bed Methane, he said.

Moily said he has formed an expert committee under Vijay Kelkar to suggest roadmap for cutting India's dependence on imports to meet its oil needs.

India currently imports as much as 79% of its oil needs and the Ministry wants this to be cut to 50% by 2020 through intensive exploration and exploitation of untapped reserves.

"I see import dependence coming down by 50% by 2020 and by 75% in 2025. By 2030, we should be self-reliant," he said.

The draft shale gas policy does not permit cost recovery and hence profit sharing - the two features that came under criticism by the CAG in its audit report on Reliance Industries' KG-D6 block. Bidders would be asked to quote a percentage of output they are willing to share with the government at different production slabs.

"This will minimise government intervention and remove complications in accounting, and incentive for gold plating, which may occur while allowing profit sharing, based on cost recovery," the DGH's draft policy said. "Government share of production will be net of all statutory dues," it said.