State-run GAILBSE -0.37 % plans to spend close to $1.5 billion (about Rs 9,500 crore) to acquire a shale gas asset in the United States to meet future gas demand in India and other markets along with partly offsetting the risk associated with the market-linked pricing of 6 million tonnes of liquefied natural gas it has contracted to purchase annually from the US.

A global crash in oil and gas prices has prompted many operators in the US to shelve the development of many unviable shale oil and gas fields. "In the US, if you stop exploration, you are likely to lose your acreage to the government," said a GAIL executive, who did not wish to be identified. Therefore, it makes sense for the shale explorers to sell assets to someone willing to fund exploration and production, he said.

GAIL, the biggest operator of natural gas pipeline in India, is still scouting for the asset and has not yet zeroed in on any specific opportunity. "We are searching for an asset that can produce about 3 million tonnes per annum. That will help cover the pricing risk of about 50 per cent of the LNG we have contracted to buy," the executive said.

The company has contracts with producers in the US to buy about 6 million tonnes of LNG annually for 20 years, beginning 2017-18. The purchase price under the contracts is linked to Henry Hub, US index for gas prices.

The ownership of a producing block will mean that any loss arising due to increased prices of contracted LNG can be offset by gains from the producing block. GAIL already holds 20 per cent stake in Carrizo's Eagle Ford Shale acreage in the US. The company, mainly engaged in gas transportation and marketing, has in recent years picked up participating interests in about 20 exploration blocks in India and overseas, expanding its presence across the hydrocarbon value chain. GAIL has already sold to Shell and other firms about 2 million tonnes of LNG it had contracted from the US, its chairman BC Tripathi said on Wednesday.