India Stumbles over Shale Gas Contracts

India Stumbles over Shale Gas Contracts


NEW DELHI, Aug 14 (Reuters) - 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.


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