GAIL to Exit Shale Gas Venture in US Amid Changing Partnerships

GAIL (India) Ltd plans to sell its 20% interest in US shale gas assets, mirroring similar moves by Reliance and Oil India. The decision stems from subdued profits tied to low US gas prices and follows partner ownership changes. Bids are invited for the asset sale by February 14.

State-owned gas utility GAIL (India) Ltd is set to exit its shale gas venture in the United States, following the strategic withdrawal footsteps of other Indian energy giants like Reliance Industries Ltd and Oil India Ltd. The company has announced a tender to divest its 20 percent stake in Eagle Ford Shale Assets located in Texas, with the transaction expected to take effect from January 1, 2025.

As per company insiders, the decision emerges amidst diminishing returns owing to depressed gas prices in the US. The privately housed venture, a subsidiary of GAIL, was not meeting profit expectations that justified its continuance. GAIL's entry into the US shale market dates back to 2011 when it acquired a 20 percent interest in Eagle Ford for USD 95 million, further promising a development expenditure of USD 300 million over five years.

GAIL's forthcoming exit aligns with the previous moves by Reliance in the Eagleford basin and Oil India's past divestiture of US shale assets. Current interests held by GAIL showcase a robust production profile, with the asset generating USD 820,000 monthly from the Eagleville field. Despite the stable cash flow, strategic realignment prompted the decision to sell, buoyed by the recent change in operatorship to Texas American Resources and Ridgemar.

(With inputs from agencies.)