The Union Petroleum and Natural Gas Ministry is likely to sign a memorandum of understanding with the U.S. in the area of technology related to extraction of shale gas during the forthcoming visit of President Barack Obama to India.
“The natural gas industry is expanding into exploration and production of shale gas. This will be the new area for investment. The Centre has initiated action to develop and put in place a policy environment for exploitation of shale gas in Indian Basins. It is expected that in about a year's time, blocks can be offered for shale gas,” said Petroleum and Natural Gas Minister Murli Deora here on Monday, while speaking at the road show of the IX round of New Exploration Licensing Policy (NELP-IX).
Petroleum and Natural Gas Secretary S. Sundareshan said the memorandum of understanding with the U.S. would aim at identifying basins with good prospects. He said a policy on shale gas would be in place before the end of 2011.
The Union Minister also clarified that the government was considering applications made by Cairn Energy and the decision would be known shortly.
On profit-linked tax holidays, Mr. Sundareshan said a seven-year tax holiday was granted for petroleum products for NELP-I to NELP-VII as per directives of the Ministry of Finance. However, the issue relating to tax-holiday for natural gas was pending in various tribunals. He said NELP-IX would be governed by the proposed Direct Tax Code (DTC).
As per the DTC, all profit-linked holidays would be removed and would be replaced by investment-linked incentives. Mr. Sundareshan said NELP would be, most probably, replaced by Open Air Licensing Policy (OALP). “Hopefully, there would be no NELP-X. The government will take another year to come up with OALP policy,” he said.
The Petroleum and Natural Gas Secretary said his Ministry was in discussion with the Coal Ministry over Coal Bed Methane (CBM)-V round and as soon as enough blocks were available, the fifth round would be launched. On the issue of fuel pricing policy, Mr. Sundareshan said at present there was no move in the government to go forward on decontrol of diesel pricing.
Earlier, Mr. Deora inaugurated the first road show of the IX round of NELP and he invited exploration and production companies and prospective investors to avail themselves of the highly attractive investment opportunities being offered under the latest round.
While delivering the key note address at the road show to promote 34 exploration blocks offered under the latest round for global competitive bidding, Mr. Deora said NELP-IX had been launched in the backdrop of 87 oil and gas discoveries which had already been made in 26 exploration blocks by accretion of in-place hydrocarbon reserves of more than 640 million tonnes of oil equivalent (mtoe).
