The government has amended the Petroleum and Natural Gas Rules 1959 to include shale in the definition of petroleum, a change that would allow private companies to explore and produce the resource in the blocks they already operate.
"Petroleum means naturally occurring hydrocarbons, whether in the form of natural gas or in a liquid, viscous or solid form, or a mixture thereof, but does not include coal, lignite, and helium occurring in association with petroleum or coal or shale," the oil ministry said in a notification.
Prior to this, the definition excluded shale and therefore barred companies from exploiting it from fields that are producing conventional oil and gas or coal-bed methane.
Commenting on the development, Great Eastern Energy Corporation Ltd Managing Director and CEO Prashant Modi said: "The amendment of the definition of petroleum is a welcome move as it would open up exploration of all hydrocarbons in existing fields which is line with the new Hydrocarbon Exploration Licensing Policy (HELP)."
It would help in enhancing domestic exploration and production of hydrocarbons and increasing India's energy security and reducing dependency on imports, he added.
However, the exclusion of natural gas from the purview of GST remains a deterrent to attracting large-scale investments as neither the producers nor the consumers are able to set off the taxes paid on their input and output, he said.
While the Goods and Service Tax (GST) was implemented from July 1, 2017, crude oil, natural gas, petrol, diesel, and jet fuel (ATF) were kept out of it for the time being. No date for their inclusion in GST regime has yet been announced.
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