India will unveil shale gas exploration policy by month-end in an attempt to exploit the unconventional hydrocarbon resource, Oil Secretary G C Chaturvedi said today.

"We will come out with a shale gas policy by the end of December. We are sticking to this deadline," he said at the 11th Petro India Conference organised by India Energy Forum and Observer Research Foundation here.

The government is planning to launch its first auction of shale gas block by 2013-end on terms that are likely to be remarkably different from those offered in bid rounds for oil and gas blocks.

Shale gas or natural gas trapped in sedimentary rocks (shale formations) below the earth's surface, is the new focus area in the US, Canada and China as an alternative to conventional oil and gas for meeting growing energy needs.

As per the available data, six basins -- Cambay (in Gujarat), Assam-Arakan (in the North-East), Gondawana (in central India), KG onshore (in Andhra Pradesh), Cauvery onshore and Indo Gangatic basins, hold shale gas potential.

The Directorate General of Hydrocarbons (DGH), the Oil Ministry's technical arm, has proposed to offer areas for exploration shale gas on royalty and production-linked payments to the government.

The draft policy does not permit cost recovery and hence profit sharing - the two features that came under criticism by the CAG in its audit report on Reliance Industries' KG-D6 block.

Bidders would be asked to quote a percentage of output they are willing to share with the government at different production slabs.

"This will minimise government intervention and remove complications in accounting, and incentive for gold plating, which may occur while allowing profit sharing, based on cost recovery," the DGH's draft policy said.

"Government share of production will be net of all statutory dues," it said.