A new sense of energy

Recent corporate moves in shale gas have been particularly dramatic. Reliance Industries has struck three multi-billion dollar deals with US shale gas firms this year alone.

The most striking transformation of India’s energy sector is taking place not in nuclear or solar power, but in natural gas. The Krishna-Godavari offshore gas finds, the making of a national pipeline grid and, now, the first Indian venture into shale gas will dramatically change the energy profile of the country. Recent corporate moves in shale gas have been particularly dramatic. Reliance Industries has struck three multi-billion dollar deals with US shale gas firms this year alone. Even public sector oil firms have tied up with foreign firms in search of shale gas know-how.

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hale is a common rock formation often impregnated with oil and gas that, in the past, have been commercially too expensive to extract. This has changed following technological advances in the 1990s. A shale gas revolution has converted the US from gas importer into a gas-surplus country. American gas prices have fallen so rapidly that in energy equivalent terms US gas is now as cheap as $12 barrel oil and about half the price that India has fixed for Krishna-Godavari gas. Shale gas is already shaking up the global system. Europeans see it as the means to break their dependence on Russian gas.

One reason India is rightly refusing Iran’s pricing mechanism for its future pipeline is that Tehran’s yet to understand that global gas prices are set to go southward for decades. Iran’s insistence that its gas price should be pegged to that of oil’s is patently absurd. The US, leaders in this technology, are cognisant that shale gas would reduce carbon emissions by pushing out dirty coal and potentially tame oil-rich irritants like Venezuela and Iran. In April, it offered to provide assistance to any country seeking to exploit its shale gas reserves.