Oil India eyes shale gas acquisition overseas

Oil India eyes shale gas acquisition overseas

Mumbai: Oil India Ltd plans to buy shale gas assets in the United States and Australia, and has shortlisted seven investment banks to explore acquisition opportunities, senior officials said on Thursday.

The state-run explorer plans to spend Rs4,500 crore ($962 million) in capital expenditure in this fiscal year to March 2011, including acquisitions, T.K. Ananth Kumar, director of finance at Oil India told reporters.

Kumar said the company would team up with two other state-run energy firms, GAIL India and Indian Oil, for possible acquisition of shale gas assets. The firm wants to make at least one acquisition in the current fiscal year, he said.

Oil India has shortlisted seven investment banks including Citigroup, Morgan Stanley, Bank of America Merrill Lynch and Deutsche Bank for its overseas shale gas acquisition plans.

Companies from around the globe are increasingly investing in US shale plays — underground rock formations that hold reserves of oil and natural gas.

Shale gas accounts for between 15% and 20% of US gas production but is expected to quadruple in coming years, touching off a scramble among producers large and small for access to resources.

Energy major Reliance Industries Ltd, which has already done three shale gas joint ventures with US companies this year, is a likely partner for Chesapeake Energy Corp’s Eagle Ford shale acreage, a US brokerage firm said on Wednesday. Separately, Oil India chairman N.M. Borah declined to comment on whether state-run Oil and Natural Gas Corp, GAIL and Oil India would jointly counter-bid Vedanta Resources’ $9.6 billion offer to buy a majority stake in Cairn India.

A senior official in the oil ministry told Reuters on Wednesday that the state-run firms would not counter Vedanta’s offer for a stake in Cairn India.