Policy on CBM in a week, shale in a fortnight
After unleashing a frontal attack on subsidies and increasing the pricing freedom of oil companies, the government is set to unwrap key policy initiatives this month with a view to augmenting the country?s energy security.
These include a new policy to attract investors to shale gas ? a relatively new energy source successfully tapped by the US and Canada ? and a potentially more remunerative regime for investors in coal bed methane (CBM) blocks.
Speaking at the Express Group?s Idea Exchange programme on Wednesday, oil minister M Veerappa Moily said: ?Both the shale gas policy and the revised CBM policy are ready. We will be taking the former to the Cabinet for clearance in the next 15 days and the latter, within a week.?
The policy focus on energy security will also see a more aggressive yet focused foray by government-owned oil companies to acquire hydrocarbon assets in Africa as well as the South and North American continents.
?Our oil import bill has reached a whopping $140 billion. This is not a happy situation. With these policy initiatives, we hope to reduce our import dependence by 75% by 2025,? Moily said.
According to the oil ministry, the country has a potential resource base in the range of 300-1,200 trillion cubic metres of shale gas and 92 trillion cubic feet for CBM. The government has identified six basins ? the Cambay, Assam-Arakan, Gondwana, KG onshore, Cauvery onshore and the Indo-Gangetic basins for carving out blocks to tap shale gas. The draft policy favours market-determined shale gas pricing.
The minister said the Cabinet Committee on Investments has already cleared 39 oil and gas blocks which had been facing road blocks.
Recently, the defence ministry has cleared Reliance Industries? KG-D6 gas field which was under the naval zone and categorised as a ?no-go? area. When Moily took over, as many as 73 Nelp blocks entailing investments of $13.5 billion were awaiting clearances.
Demand for natural gas in India is expected to increase significantly from 179 million metric standard cubic metre per day (mmscmd) during 2010-11 to 473 mmscmd in 2016-17. Moily said more than $15 billion investment has already been made in some of the NELP blocks. The recent clearances are expected to attract $3 billion investment every year.
Meanwhile, the issue of the pricing of gas produced from coal bed methane (CBM) blocks by explorers such as Essar Oil and Reliance Industries continues to be in limbo. According to Essar Oil, the discovered price for gas flowing from its CBM block in West Bengal is $4.2/mmBtu and Reliance Industries has arrived at a price of about $13/mmBtu.
?We have taken an independent recommendation from Rangarajan on pricing of CBM gas. He has submitted a four-page note on the same. We will review and take decision accordingly,? the minister added.Shale is a non-conventional natural gas found in non-porous rocks and requires fracking technology for extraction. The unconventional gas has been a game-changer in the US, significantly reducing the country?s dependence on imported LNG.