ONGC, OIL count on foreign companies for shale drilling

By Nidhi Verma

NEW DELHI (Reuters) - Oil and Natural Gas Corp (NSI:ONGC.NS - News) and Oil India Ltd (NSI:OIL.NS - News) will tap the expertise of foreign firms to hunt for shale oil and gas in the energy-hungry nation, officials at the two firms said.

India, the world's fourth-biggest energy consumer, last month approved rules for drilling of the unconventional fuel as it wants to quickly tap its resources to cut a growing crude oil imports bill.

ONGC will be taking technical help from Houston-based ConocoPhillips (NYS:COP - News) for shale drilling, the Indian company's chairman, Sudhir Vasudeva, told reporters at an industry event on Friday.

ONGC plans to take up exploratory work in 10 wells in blocks spread across western Cambay and eastern Cauvery and Krishna Godavari basins, he said, adding commercial drilling would commence next year.

India could be sitting on as much as 96 trillion cubic feet (tcf) of recoverable shale gas reserves, equivalent to about 26 years of its gas demand, according to the U.S. Energy Information Administration.

The country, though, has been slow to open up the sector.

India has not yet formally communicated the new policy to ONGC and Oil India, that have only been allowed to drill for shale oil and gas in old blocks.

"I have given them (the exploration team) a target of 10 wells...The day the policy is announced we will declare the first well is ready for spudding. We are all prepared," Vasudeva said.

Oil India has identified the western state of Rajasthan and northeastern state of Assam for initial shale drilling and could align with Houston-based Carrizo Oil & Gas (NSQ:CRZO - News), said S. Rath, its head of operations.

Oil India and Indian Oil (NSI:IOC.NS - News) last year acquired a 30 percent stake in Carrizo's Niobrara shale assets in Colarado for $82.5 million.

"We are planning to drill some wells. We may have a cooperation between Carrizo and Oil India..we are internally prepared," Rath said, adding his firm is waiting for the policy.

(Editing by Muralikumar Anantharaman)