New Delhi, Jan. 19: The cabinet is likely to discuss the shale gas policy, which favours market-determined pricing of the fuel, in the next two weeks.
"Final touches are being given to the policy and will be placed before the cabinet in the next two weeks," a senior oil ministry official said.
The schedule for shale gas bidding includes finalisation of the policy this fiscal, identification of the gas blocks for auction, roadshows and the first round of auction before the end of the calendar year.
The government has identified six basins ' Cambay, Assam-Arakan, Gondawana, KG onshore, Cauvery onshore and the Indo-Gangatic basins ' for carving out blocks to tap the unconventional fuel.
The draft policy favours market-determined pricing of shale gas. The policy will mention the terms of exploration and production to highlight the risks involved.
The draft policy does not permit cost recovery and profit sharing ' the two features that came under the criticism of the Comptroller and Auditor General of India during its audit of Reliance Industries' KG-D6 block.
Bidders will be asked to quote a percentage of output they are willing to share with the government at different production slabs.
"This will minimise the government's intervention and remove complications in accounting and incentives for gold plating, which may occur while allowing profit sharing, based on cost recovery… The government's share of production will be net of all statutory dues," the draft policy of the Directorate General of Hydrocarbons said.
Demand for natural gas in India is expected to increase significantly from 179 million metric standard cubic metre per day (mmscmd) during 2010-11 to 473 mmscmd in 2016-17.
Studies have put recoverable reserves of shale gas between 6 trillion cubic feet and 63 trillion cubic feet.
Shale is a non-conventional natural gas found in non-porous rocks and requires fracing technology for extraction. The unconventional gas has been a game-changer in the US, significantly reducing the country's dependence on imported LNG.