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India on track for debut shale round

India’s long-awaited first shale-gas licensing round is set for launch by the end of 2013

It has emerged that the round will be based on a proposed royalty- and production-linked payment scheme, rather than a cost recovery method.

The bidding process will be via an open international competitive tender, said the oil ministry. If acreage on offer overlaps or falls within an existing conventional or coal-bed methane (CBM) block then first right of refusal will be offered to the existing contractor, ministry officials said.

Blocks will be offered to public as well as private domestic companies and 100% foreign participation is permitted.

India hopes that future shale-gas production will help meet rising gas demand as conventional production wanes, which has forced the nation to increase imports of liquefied natural gas.

The nation has been planning a shale-gas round since 2011, but the sector’s progress has been stymied by the government’s lack of progress in formulating policy.

However, the country has significant unconventional potential, with the US Energy Administration estimating the country has recoverable shale-gas resources of 63 trillion cubic feet (cf). But unlike the US, where there is a long operational history with shale plays and good availability of data, India has limited data and will require heavy investment to realise its potential.

Six basins have been identified as shale-gas prone: the Cambay, Assam-Arakan, Gondwana, Krishna-Godavari onshore, Cauvery onshore and Indo-Gangetic basins. The primary focus of the first round will be on Cambay, Assam-Arakan and Gondwana.

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