India faces several challenges in exploring for shale gas and commercial production may be expected only in another 10 years, Maria van der Hoeven, executive director of the International Energy Agency, said Wednesday.
Shale gas is unlikely to be a game changer in India like it has been in the US, but there may be a possibility of small-scale success, van der Hoeven said on the sidelines of the 8th Asia Gas Partnership Summit in New Delhi.
India's state-owned upstream major Oil and Natural Gas Corp. last month kicked off the country's first commercial exploration of shale gas, but commercial production is possible only with proper transport infrastructure and fiscal regime, she said.
"[Domestic natural gas] prices have also been too low to support shale gas production," the IEA chief said.
IEA has projected India's shale gas production at 35 billion cubic meters by 2035 and coalbed methane production 25 Bcm, but this depends on several factors, van der Hoeven said.
"First thing is public acceptance is crucial," van der Hoeven said detailing challenges India faces in shale gas exploration.
Appropriate infrastructure and ownership of minerals by those who own the land as is the case in the US is not so in India, she pointed out.
"Solve the water problem ... [There is] huge availability of water in the US, that is not the case in India," the IEA chief said.
Natural gas prices in India are heavily regulated, but India can take a step-by-step approach for a transition to market-based pricing, she said.
The government's decision to implement a new pricing formula that could see gas prices double from the current $4.20/MMBtu to $8.40/MMBtu starting April 2014 is the next step forward, van der Hoeven said.
India's oil ministry in September announced its shale gas exploration policy under which state-owned upstream companies ONGC and Oil India Ltd. are allowed to start exploration and production at their existing conventional oil and gas blocks awarded on a nomination basis. Nomination blocks were given to the state-owned E&P companies before India launched the New Exploration Licensing Policy -- a competitive bidding method -- in 1999.
The government is soon expected to announce a policy allowing private sector operators to also explore for shale gas in their existing acreages.
