NEW DELHI, March 24 (Reuters) - India plans to unveil its shale gas policy within the next two weeks as it seeks to exploit unconventional resources to fuel its expanding economy and cut subsidies, oil minister Veerappa Moily said on Sunday.
India, the world's fourth biggest oil consumer, wants to quickly tap resources to cut its import bill and rein in a widening current account deficit.
"This (shale gas) will be a game changer," Moily said, adding the cabinet would consider the policy within the next two weeks.
India lags China in tapping its shale resources. China recently announced winners for its second shale gas blocks' auction and has set ambitious target to unlock potentially huge unconventional gas resources trapped in its rocks.
China aims to pump 6.5 billion cubic metres of shale gas in 2015 to cut dependence on polluting coal and imported gas.
A lack of a policy framework and resource estimates at home have led to Indian companies like Reliance Industries, GAIL (India) and Oil India turning their focus to shale gas assets overseas.
Instead of auctioning blocks under the new policy, India may ask contractors of the existing 254 blocks, awarded under various licensing rounds, to consider shale gas exploration, oil secretary Vivek Rae said.
"We can not offer existing blocks for shale gas exploration to other companies. However, in future we may have a single round and companies will be allowed to commercially exploit whatever they think is more profitable," Rae added.
To spur investment in its gas sector, and to make many mature producing fields profitable, India will consider suggestions from a government panel on gas pricing in a couple of days, Moily said.
Falling local gas output, mainly by the Reliance Industries-operated deepwater D6 block in India's east coast, has affected gas-based power plants in a country where peak power shortages at times run over 15 percent.
Local gas could cost as much as $8-$8.50 per million British thermal units (mBtu) if the panel's suggestions are accepted, Rae said, almost double the current $4.2 per mBtu.
Higher gas prices may stoke inflation and hit power and fertiliser companies which buy the bulk of the gas sold at government-fixed rates. (Reporting by Nidhi Verma; Editing by Mark Potter)