Public sector Oil India Ltd (OIL) is looking for tie-ups with shale gas companies in the US, Poland and Australia. The government-controlled exploration company has hired seven banks to facilitate completion of at least one overseas acquisition this financial year.
Although the company had earmarked Rs 4,000 crore for international acquisitions this year, none has been made so far. “We are exploring tie-ups with an experienced player. We want to enter the shale gas business with a company that has the expertise,” said a company executive.
OIL director (Finance) T K Ananth Kumar had said in August that the company was looking at acquiring international shale gas assets in the US and Australia. “We want to make at least one acquisition in this fiscal.”
Shale gas refers to underground rock formations that hold reserves of oil and natural gas. The US is becoming increasingly attractive for companies across the globe for shale acreages. Shale gas accounts for around 20 per cent of the US gas production.
Private sector Reliance Industries (RIL) has, over the past five months, made three shale gas acreage acquisitions in the US. In April this year, RIL bought a 40 per cent stake in Atlas Energy Inc’s Marcellus Shale acreage for $1.7 billion. In June, it agreed to buy a 45 per cent stake in Pioneer Natural Resources’ Eagle Ford shale natural gas asset in Texas for about $1.36 billion. This month, it acquired a 60 per cent stake in the Marcellus shale-gas acreages of Carrizo Oil and Gas Inc in the US for $392 million.
In August, Bharat PetroResources Ltd, the overseas upstream arm of state-run Bharat Petroleum Corporation Ltd (BPCL), bought two exploration acreages of shale gas operated by Norwest Energy at Perth, Australia.
The company signed a letter of intent with Norwest Energy to acquire a 50 per cent stake in block TP-15 and 27.8 per cent stake in block EP-413. This was BPCL’s first international shale gas acquisition, where it would invest Rs 63 crore for exploration and drilling of the blocks.
Within the country, the government is looking to launch the first-ever auction of shale gas areas in August 2011. The areas will first be identified and then divided into suitable blocks next year.
Shale gas auction will be the second unconventional natural gas source in India after coal bed methane. Several basins – Cambay (in Gujarat), Assam-Arakan (in the North-East) and Gondwana (in central India) – are known to hold shale gas resources.
