Cairn India Looks at Shale Gas

Cairn India is planning to bid for shale acreage once the bidding process starts in 2013.

"Yes, we are keen to bid for shale acreages in India, but it is too preliminary to discuss the nature of investments we will be putting in as we need to access a lot of data before we decide on a definite strategy," a senior Cairn India executive, who did not want to be identified, told Economic Times. 

Discussing shale gas, the executive told the newspaper, "The lack of cost recovery provision could be seen as a deterrent as investments are typically very large for most exploration projects. Still we are keen to evaluate the shale potential in India."

Officials say the government is likely to abandon the system allowing companies to recover their cost before sharing profit. Instead, it is likely to adopt the royalty and production-linked payment system for auction of shale acreages. Bidders would be asked to quote a percentage of output they are willing to share with the government at different production slabs, the report said.

The draft policy suggests payment of ad valorem royalty at the prevailing rate for crude oil and natural gas for shale oil and gas, which would accrue to the state governments.