Calgary (Platts)--11Feb2011/422 pm EST/2122 GMT

India's ONGC Videsh Ltd and Gas Authority India Ltd are pursuing efforts to invest in Alberta's oil sands and shale gas resources, government and company officials said Friday.

"OVL is still on the case and is carrying out an in-depth assessment on investing in Alberta's oil sands assets," said Dependra Pathak, director-exploration at India's Ministry of Petroleum and Natural Gas, on the sidelines of a two-day roadshow held in Calgary to unveil details of the ninth round of India's National Exploration and Licensing Process.

"OVL is now debt-free and has the financial capability to invest at least $1 billion in overseas acreages," Pathak said. "Along with a feasibility study, they are also holding talks with [prospective] sellers of oil sands assets in northern Alberta."

With Canada's bitumen deposits are gaining "wider acceptance" primarily due to technological advances, Pathak said high oil prices have also made the assets "lucrative."

"Issues relating to operatorship and quality of assets would be benchmark factors guiding any investment by OVL," Pathak said. "Alberta's oil sands assets are probably one of the best upstream investment opportunities that are now available globally and we will look for a threshold resource of at least 1 billion barrels. Gaining access to the long-term barrels will also be a prime driver."

The Indian government, the majority owner in both OVL and GAIL, is also considering options of sourcing Alberta's extra-heavy crude for use as feedstock for its domestic refineries, Pathak said.

"With a plan in place to upgrade our facilities by installing cokers and initiating a secondary refining process, taking crude from Canada is a target area for us," he said. "We will be working on this over the coming few years" he said.

ON RELIANCE RADAR

B Singh, GAIL's director of exploration and production, said his company was in talks with at least two Canadian companies for joint acquisition of shale gas assets in Alberta and British Columbia. He did not identify them.

"Shale gas is a frontier area for us and India is one of the leading nations after Canada and the US to initiate production," Singh said. "Just recently, we have started production in small volumes from a project in Durgapur in eastern India. The first well was drilled with very high prospects."

"Shale will be economical only after a gas price of $6/MMBtu," Singh said. "There is a great deal of expectation in this sector, but we feel the rate of returns on investment may not be that high as the industry is projecting it to be."

OVL and GAIL would be the third Indian company to scout for unconventional energy resources in Western Canada, after Reliance Industries Ltd. Last October, senior advisor to RIL's chairman, Atul Chandra, said that oil sands continued to be on his company's radar.

Meanwhile, Pathak said March 18 has been set as the closing date for submission of technical and commercial bids for the blocks under India's NELP IX. A total of 34 oil and gas acreages, 19 onshore and 15 offshore, spread over 88,707 sq km and in 10 sedimentary basins are on offer.

"The last eight rounds of NELP have resulted in $15.6 billion worth of investment and 235 blocks being awarded," Pathak said. "However, the Indian government would like to soon move from NELP to open general licensing and the directorate general of hydrocarbons is working on setting up a national depository data. This would allow any [international oil company] to bid independently and not go through a licensing process."

--Ashok Dutta, newsdesk@platts.com

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