The government would unveil shale gas policy in the next few weeks, Union Petroleum Minister Veerappa Moily informed.
According to Petroleum Secretary Vivek Rae, the government may ask contractors of the existing 254 blocks, awarded under various licensing rounds, to consider shale gas exploration.
This is because the existing blocks could not be offered for shale gas exploration to other companies. However, he said in future the government would auction blocks in a single round and allow companies to exploit commercially whatever they think is more profitable.
Meanwhile, the government is also considering reforms in the natural gas sector in order to encourage private investment in it. Falling local gas output, mainly by the Reliance Industries-operated deepwater D6 block in India’s east coast, affected gas-based power plants in a country where peak power shortages at times run over 15 per cent.
If the government implements the recommendation of the committee headed by Prime Minister’s Advisory Council Chairman C Rangarajan, local gas could cost as much as $8-$8.50 per million British thermal units (mBtu), almost double the current $4.2 per mBtu.
Higher gas prices may stoke inflation and hit power and fertiliser companies which buy the bulk of the gas sold at government-fixed rates.
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