OREANDA-NEWS. June 10, 2011. GAIL India Ltd, the nation’s biggest natural gas distributor, may spend as much as USD 2 billion (Rs.8,940 crore) on acquisitions, including shale gas assets in the US and Australia, to meet fuel demand in India.

The appetite is as high as USD 2 billion, chairman B.C. Tripathi said by telephone from New Delhi late on Wednesday. “We are studying two, three shale gas projects in the US and we are also keen on Australia.”

Assets in the US and Australia would be the first in those countries for GAIL, which is planning an overseas purchase after more than three years. The state-owned firm is building pipelines and liquefied natural gas (LNG) import terminals to meet demand from factories, cars and homes in the world’s second fastest growing major economy.

As oil and gas prices rise, owning energy assets and getting that energy security is paramount because India needs the fuels, said Avinash Gupta, vice-president for equity research at Globe Capital Market Ltd in New Delhi. Acquiring them is not the easiest because every country and company is chasing energy assets.

Oil and Natural Gas Corp. Ltd and Oil India Ltd, the nation’s biggest state-run explorers, are pooling in at least USD 8.5 billion of cash reserves as they compete with rivals such as CNOOC Ltd to buy assets overseas. GAIL is seeking a stake in JSC  Novatek’s LNG project in Russia’s Arctic and the ENI SpA-operated Kashagan oil field in Kazakhstan, Tripathi said.

GAIL had Rs.1.8 billion of net debt as of 31 March and Rs.21.31 billion of cash and near cash, according to data compiled by Bloomberg. The company’s debt-to-equity ratio was 0.93, according to the data. Raising debt isn’t a problem on the current balance sheet, Tripathi said.

Shale formations have the potential to more than double the world’s gas reserves, the US Energy Information Agency said in a 5 April assessment. The US has an estimated 827 trillion cu. ft of shale gas, which may account for 47% of the nation’s production of the cleaner burning fuel by 2035, the agency said.

Reliance Industries Ltd, India’s biggest company by market value, last year committed USD 3.4 billion to US shale gas projects after acquiring acreages from three companies.