GAIL set to bid for 20% shale gas assets in US

Posted By: Religare
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GAIL set to bid for 20% shale gas assets in US
Gas Authority of India Ltd. (GAIL) is planning to invest around $400-500 million in a non-binding bid to acquire 20% interest in shale gas assets owned by a US company. The acquisition would be under the project nicknamed as 'project gold'. Through the acquisition, GAIL intends to gain competence to bid for the shale assets, when they come to India for bidding.

Due to the deal being under the strict confidentiality clause in the US, the sources have not revealed the US Company participating in the deal. However, as per the prior speculations, GAIL was known to target Eagle Ford Shale and Barnett Shale for the same deal. The state run gas utility is the second company after Reliance Industries to acquire equity in US shale gas assets. Reliance Industries is India's biggest private oil firm.

Shale gas, an important source of natural gas in the United States, is trapped in fine sedimentary rocks known as shale. These shales can turn out to become rich sources of petroleum and natural gas. The natural gas trapped in these shales is released by hitting the high pressure water jets in the shales.

GAIL has already received an approval from its board and has formed a committee of directors in charge of business development and finance to negotiate with the "seller". A request was also sent in December, asking the proposals from the merchant bankers who could help identifying the potential targets.

Read more about: gail india, oil and gas, commodities
Story first published: Tuesday, June 14, 2011, 12:30 [IST]
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