KOLKATA (miningweekly.com) - The Indian government is set to announce a new shale gas development policy within the next fortnight and start the auction of shale gas blocks by June 2013, with the aim of increasing the number of players in the sector.

According to a statement made by Oil Minister M Veerappa Moily, the government would be able to finalise a shale gas development policy shortly. The policy would be investor-friendly and would ensure the speedy development of natural shale gas resources in the country.

He said that a decision had already been taken to fast-track approvals for exploration projects by reducing the time taken for granting approvals from 36 months to 18 months.

To attract domestic and global investors from the oil sector, the government was planning to shift from profit sharing to revenue sharing for shale gas projects undertaken by oil companies.

The proposed developmental policy was also expected to permit the simultaneous exploration of different fuels from the same block and give preference to developers of conventional natural gas blocks or coal blocks in which shale gas may exist concurrently.

India has identified six basins as potentially holding shale gas. These include Cambay basin in the western Indian province of Gujarat, Arakan Valley in north-eastern Assam, the Gondwana region in central India, Krishna-Godavari basin off the coast of Andhra Pradesh, Cauvery basin and the Indo-Gangetic basin.

The Ministry, citing the US Energy Information Administration, said that the country’s shale gas reserves were estimated at 290-trillion cubic feet, of which about 20% could be considered to be technically and economically recoverable.

According to a Ministry official, one of the prime focus areas of the new shale gas development and allocation policy would be to enable domestic exploration and production companies to develop proprietary technologies, as shale gas-related technologies were at an embryonic stage within the country.

At the bilateral level, the Ministry would seek strategic tie-ups with countries like the US, Australia, Russia and China, which have access to advanced technologies and successful shale gas business models.

Indian companies in the oil and gas sector have very limited exposure to shale gas exploration, development and commercialisation. Government-owned oil infrastructure and services major GAIL India has been granted access to ship shale gas from the US to India and also to conclude a tie-up with EDF France, to jointly scout for shale gas assets in the US.

Oil and Natural Gas Corporation Limited, meanwhile, is conducting an ongoing shale gas pilot project to develop appropriate technologies, in the Damodar River Valley.