The Times of India is reporting that state-run gas utility GAIL (India) Ltd. is making a non-binding bid for acquiring 20% interest in shale gas assets owned by a US company.

Nicknamed 'Project Gold' , the deal is estimated to cost some $400-500 million, persons familiar with the negotiations said.

The newspaper is not identifying the US company to avoid any adverse impact on the deal in view of the strict confidentiality clause, but it would be pertinent to say that GAIL was eyeing Eagle Ford Shale and Barnett Shale, both based out of Texas.

GAIL is the second company after Reliance Industries, India's biggest private sector oil firm, that is acquiring equity in US shale gas assets.

The GAIL board has approved the bid and has formed a committee of directors in charge of business development and finance to negotiate with the "seller" . The acquisition is aimed to give GAIL the competence to bid for shale gas assets in India as and when they come up for auctions.

GAIL had issued in December a request for proposals from merchant bankers who can help to identify potential targets and eventually close a deal. GAIL chairman B.C. Tripathi is on record saying the company could spend up to $2 billion or so in acquisitions.

The company is in partnership talks with ONGC Videsh, the state-run explorer ONGC's overseas investment arm, for joining a consortium to bid for oil and gas fields besides an LNG project in Kazakhstan and Russia.

Source: Times of India