Cairn has written to the Petroleum & Natural Gas Ministry that the proposed Shale Gas Policy should not limit the first right of refusal to contractors of New Exploration Licensing Policy (NELP) blocks.

If it is, Cairn will not be able to exploit shale gas/oil in its Barmer oilfields, as the area was contracted for before the licensing regime.

The Petroleum Ministry is considering allowing oil and gas explorers to also look for shale gas in their respective blocks. The final call will be taken by the Cabinet.

But if the Ministry limits it to NELP blocks, then in areas such as Cairn’s Barmer block, another contractor will have to undertake shale oil/gas exploration.

This will result in overlapping of leases, contractual conflicts, disputes on claims to resource ownership and sub-optimal utilisation of capital, and will hamper the development of hydrocarbons, Cairn’s Chief Executive Officer, P. Elango, wrote to the Ministry.

Besides Cairn’s Barmer block, there are 27 more such blocks, of which 11 have either been surrendered or relinquished, and some with the contract period nearing completion. Shale gas is an unconventional energy source, found in non-porous rock. It is an important source of natural gas in the US and there is growing in it in Canada, Europe, Asia and Australia.

In India, shale gas deposits are found in the basins of Gondwana (Central India), Assam-Arakan (North East), Cambay (Gujarat), Rajasthan, Krishna Godavari (East Coast) and Cauvery.

Hydrocarbon exploration and production companies such as ONGC (in West Bengal, Jharkhand and Cambay Basin) and Cairn India (in Rajasthan) were working on it.

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