India will soon be staking out its role in the ongoing shale revolution.
By the end of 2013, the country will begin its first auction of shale gas blocks, albeit with significant differences from oil and gas block auctions.
Bidders will have to cite a percentage of production output that they are open to sharing with the Indian government.
“This will minimize 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 [Directorate General of Hydrocarbon] draft policy said. “Government share of production will be net of all statutory dues”.
The first phase of the auction will include six basins—Cambay, Gondwana, Assam, KG onshore, Cauvery onshore, and Indo-Gangetic.
The Oil and Natural Gas Commission currently is involved in identifying at least 11 more shale basins.
The plan will allow the participation of public and private sectors, and it also opens up the way to 100 percent participation by foreign interests. Should there be a consortium formed, the operator would have at least 25 percent participating interest.
The policy will also protect against location conflicts; if a shale block appears to fall within an existing oil or gas bed, then the current contractor gains the right to match any competing bids for that block. Cost recovery and profit sharing will probably not be feasible under the policy terms.
It is estimated that current shale reserves over there are between 6 and 63 trillion cubic feet.