Illustration: Liu Rui/GT

Heated debates on energy security are inevitable in an energy-thirsty nation like India, where the gap between supply and demand for energy resources is constantly growing.

Domestic energy supply constraints mean India has ever increasing imports in the form of crude oil and coal. These strain the country's finances, and consequently the Ministry of Petroleum and Natural Gas feels the need to dig deep to find untapped natural gas resources, in particular, non-conventional fuels like shale gas and coal bed methane.

The gas sector is at the core of India's energy sector and capturing those resources is a key need. But gas production and reserves are plummeting. As a result, India has more often than not witnessed the impact of gas shortages, particularly with respect to its gas-run power sectors, which witnessed a record decline in their power generation in the September 2013 quarter, falling by 41.7 percent year on year to 9.9 billion units.  

Considering existing energy trends and the likely future natural gas scenario, given the shale gas boom in the US and potential shale resource finds by the India's Energy Information Administration (EIA) in the six main basins of the country, the Indian government is ramping up gas exploration.

The recent estimates by the EIA reveal 96 trillion cubic feet of recoverable shale gas reserves in India. Being the world's third largest energy consumer and net natural gas importer since 2004, shale gas production can be a promising alternative for India. The tapping of domestic shale gas reserves would be crucial for India's goal of reducing crude oil imports to nil by 2030.

But as the government is determined to come out with its new shale gas policy, it continues to face challenges on two major grounds: the availability of water resources in areas planned for shale gas extraction and the land on which such exploration and production work will take place.

Both issues have been consistently highlighted in reports. But the recent land acquisition bill 2013, which is going to be the land acquisition act with effect from January 1, 2014, could become yet another obstacle for India's shale gas hopes.

Though India dreams of replicating the shale gas successes of the US, it cannot enjoy the luxury of easily acquiring land for shale gas operations. In the US, landowners, besides owning surface rights, also own mineral rights. Consequently, they receive huge financial incentives directly from oil and gas companies.

Unlike in the US, where oil and gas operators deal directly with a landowner to acquire land, in India, the central government facilitates the process. It is largely due to this reason that Indian oil and gas companies, in particular the private companies, are not enthusiastic about shale gas operations in India.

In India, landowners have no incentives to offer the land to the government and often don't feel they will get fair compensation. This is in addition to the usual protests led by various non-government organizations which are against the exploitation of ground water for fracking.

This problem is compounded by India's new land acquisition bill, which requires the government to take into account the impact on sources of drinking water.

Ultimately, the main thrust of the bill is to aid the rehabilitation and resettlement needs of farmers, and despite the law being cumbersome, it attempts to bring more transparency to land acquisition procedures.

But, despite some of the companies in India being apprehensive about the proposed bill, which according to them will bring up the costs of the projects significantly and make them unviable, it could still be landowner friendly if they are stakeholders in the projects. The projects could improve their skills and help provide them with fair compensation. All this will result in more acceptance than rejections in terms of landowners being willing to give up their land for gas projects.

Therefore, with an understanding that these commercial operations including shale gas will impact government, landowners, farmers and the companies in land acquisition process, it becomes extremely important for these stakeholders to work in tandem and coherently, so as to check time and cost overruns of the projects, without undermining the socio-economic and environmental aspects.

The author is a junior fellow with the Observer Research Foundation, with an interest in energy policy and geopolitics. opinion@globaltimes.com.cn