IOC sniffs US shale gas stake
New Delhi   16-Oct-2010

State-owned refiner IndianOil has identified shale gas opportunities in the US.

The company is studying the prospects of venturing alone or with other state-owned firms to acquire stakes abroad.

"Some good shale gas prospects have been identified in the US and we are looking at them," a senior IOC official said but did not divulge the name of the US company it was eyeing.

Officials said, "IOC has set aside $1 billion for overseas acquisitions in exploration and production, including shale gas assets in the US. We may join hands with other state-owned firms, if needed."

India is likely to sign a technical co-operation agreement with Washington to explore shale gas during US President Barack Obama's visit in November.

Shale gas is an unconventional natural gas found in non-porous rocks. Extraction involves tapping the gas trapped between the layers of shale rocks, similar to the extraction of gas from between coal seams. The huge potential of shale gas has led to a spate of acquisitions. Reliance Industries has entered into two joint ventures in the US - with Atlas Energy and Pioneer - to develop shale gas.

IOC plans to come out with a follow-on public offer in the last quarter of the fiscal with the government divesting 10 per cent stake and the state-owned firm issuing 10 per cent fresh equity. The divestment will reduce government holding in the firm to 64.57 per cent from 78.92 per cent.

"Additional cash from the FPO will provide the much needed impetus to the firm to go on an aggressive buying spree to emerge as an integrated energy firm," sources said.