Shale gas 'bonanza' as ministry includes all players

Vol 17, PW 17 (10 Apr 14) People & Policy

Reliance, Cairn and other private sector explorers will soon have the right to begin shale gas exploration under a new government policy.

Widespread condemnation followed the government’s announcement of its first shale gas policy last September which permitted only state-owned explorers ONGC and Oil India to explore shale prospects at their older pre-NELP blocks. “We have now begun preparing a shale gas policy to allow all companies to exploit their NELP, pre-NELP and CBM blocks for unconventional prospects,” confirms a ministry official.

This month (March 10) the ministry wrote to the DGH asking state-owned explorers ONGC and Oil India to comment by end-April on a draft policy ‘note’. “Established operators need government support to work at the leading edge of this revolution,” adds our ministry source.

“It may turn out to be a ‘bonanza’.” Under discussion is whether ‘cost recovery’ should be allowed and crucially, if tax breaks should be offered to encourage exploitation of tight shale formations.

One suggestion from upstream industry body Association of Oil and Gas Operators (AOGO) is for the government to reimburse service tax for the cost of acquiring shale gas data. Existing research shows six Indian basins with shale gas potential: Cambay in Gujarat, Assam-Arakan in the northeast, Gondwana in central India, KG onshore in Andhra Pradesh, Cauvery onshore and the Indo-Gangetic basin.