India to Finalize Policies to Boost Local Natural Gas Output

NEW DELHI - India will "very soon" finalize policy on shale gas exploration and is actively considering new rules to allow commercial gas production from coal blocks allotted to several companies for industrial uses in an attempt to raise natural gas output, its federal minister said Tuesday.

The plans are in line with the country's goal to cut dependence on energy imports by half by 2020 and eliminate it by 2030. India now imports 75% of its energy needs.

India has laid out several plans to liberalize its energy policies ranging from partially loosening control on pricing of natural gas to freeing up gasoline pricing and allowing fuel retailers to steadily raise diesel rates as it looks to attract more investment in the sector.

"Much like the United States of America, shale gas can emerge as an important new source of energy for our nation. India has several shale formations which seem to hold shale gas," M. Veerrappa Moily said in a statement. Surging supplies of natural gas in North America, unlocked from shale rock, has cut the U.S dependence on imports and on coal to run power stations.

He also said that India has "significant prospects" for exploration of coal-bed methane as the country has the world's fourth-largest coal deposits. To raise the gas output from coal blocks the federal government is considering a policy to allow companies who have mining licenses for industrial uses to start gas production.

India has auctioned 33 coal blocks exclusively for gas production and has allotted licenses for 194 other blocks to companies from sectors such as power and steel to power their respective projects.

Both policies would help arrest the declining trend in India's natural gas output and reduce dependence on imports.

Mr. Moily forecast a 5.7% decline in natural gas production in this financial year to 105 million metric standard cubic meters a day, but also projected a 4.3% rise in local oil output to 39.40 million metric tons.

The shortage of gas has badly hit consuming industries such as power and fertilizer.

Copyright (c) 2012 Dow Jones & Company, Inc.


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