After allowing state-owned firms to explore shale oil and gas from their blocks, the government will soon permit private companies like Reliance Industries and Cairn India to find and produce shale resources.

“My first original draft (shale gas policy) was for a comprehensive policy involving exploration of shale resources by both public and private sector companies. But finance ministry had some constraints... so we bifurcated that allowing national oil companies first,” Oil Minister M Veerappa Moily said on the sidelines of the HSE Conference organised by Cairn India here.

The Cabinet Committee on Economic Affairs (CCEA) on Tuesday approved the long-awaited shale gas and oil exploration programme to boost domestic output.

In the first phase, state-owned ONGC and OIL have been permitted to explore for and produce shale oil and gas from land blocks that were allotted on a nomination basis before advent of the New Exploration Licensing Policy in 1999.

The government will offer shale oil and gas blocks to other companies through an auction planned after such a policy is taken to the Cabinet for approval in the next few weeks.

The policy for allowing private firms to also explore and produce shale oil and gas “will come very soon,” he said.

Shale gas, or natural gas trapped in sedimentary rocks (shale formations) below the earth’s surface, is the new focus area in the US, Canada and China as an alternative to conventional oil and gas for meeting growing energy needs.

As per available data, six basins — Cambay (in Gujarat), Assam-Arakan (in the North-East), Gondawana (in central India), KG onshore (in Andhra Pradesh), Cauvery onshore and Indo-Gangetic basins — hold shale gas potential.

Various studies have estimated recoverable reserves of shale gas at between 6 trillion cubic feet and 63 trillion cubic feet.

Shale production will be taxed at par with conventional fields.

“Initially, I was in favour of an integrated shale gas policy but due to certain issues we decided to take the first step (of allowing state-owned firms to explore),” Mr. Moily said.

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