New Delhi, Jan. 23: State-owned GAIL (India) Ltd and Oil India are planning to jointly bid for shale gas assets in the US and Australia.
Sources said the PSU duo would not only bring valuable natural resources into their fold but also gain experience on this new form of energy, with the first round of auctions in India for shale blocks slated later this year.
Oil India has shortlisted seven investment banks, including Citigroup, Morgan Stanley, Bank of America Merrill Lynch and Deutsche Bank. It plans to acquire at least one asset abroad this year and is ready to pay Rs 4,500 crore.
GAIL, on the other hand, plans to invest around Rs 2,000 crore, company sources said.
State-owned oil and gas firms are keen on overseas shale gas blocks to acquire the technical expertise from local firms, which own the gas fields.
Arvind Mahajan, energy analyst with KPMG, said, For GAIL, backward integration in natural gas and the acquisition of a producing asset will be beneficial. Joining hands with an exploration firm such as Oil India will give them the added advantage when the shale gas blocks in the country come up for auction.
Reliance Industries has acquired three shale gas assets this fiscal and formed joint ventures with firms in the US.
India plans to auction the first of its shale gas blocks by the end of this year, with policy-makers engaged in studying availability as well as regulatory and legislative issues.
Resource assessment, policy framework and legislative changes are in progress for the auction, director-general of hydrocarbons S. K. Srivastava said.
Officials said norms on production-sharing and profit-sharing with states would also be in place before the first round of auction occured.
India has signed a shale gas agreement with the US to determine the reserves in the country and help in the preparation of the auction.
Shale gas is a non-conventional gas trapped in non-porous rocks and requires the fracking technology for extraction.
According to preliminary estimates, shale gas reserves in the country may be larger than the proven conventional deposits.
India has 1,074 billion cubic metres of natural gas reserves, oil ministry statistics reveal.
Several basins in the country are known to hold shale gas resources.
Primarily, the focus is on three basins Cambay (in Gujarat), Assam-Arakan (in the Northeast) and Gondwana (in central India).