India and the United States have agreed to cooperate on energy projects, including shale gas and clean energy, Indian Prime Minister Manmohan Singh and U.S. President Barack Obama told a press conference today.

The two countries will set up a research and development center for clean energy in India and will provide annual funding of $5 million each for five years, with matching investment from the private sector, they said in a joint statement made in India during Obama's three-day visit there.

"We agreed to deepen our cooperation in pursuit of clean energy technologies, including the creation of a new clean energy research center here in India, and continuing our joint research into solar, biofuels, shale gas and building efficiency," Obama said.

The statement said initial priority areas for the research center would be "solar energy, second-generation biofuels and building efficiency." The agreement initially runs for 10 years.

India, which has one of the world's lowest power-consumption rates per capita, has set a power generation target of 62,000 megawatts by March 2012. It now has around 165 gigawatts of installed generation capacity.

Around two-thirds of the country's electricity is generated from thermal power now, using coal, gas, and liquid fuel.

India is looking at alternative sources of energy to plug gaps in its supply and demand for electricity that lead to frequent power cuts.

Nuclear and hydro electricity generation account for less than a quarter of India's total output currently.

Its crude oil needs are met largely through imports, with make up around four-fifths, as near double-digit economic growth gobbles up energy. So far, its own oil exploration has provided insufficient flows.

The agreement on shale gas calls for the United States to carry out studies on resources and for cooperation on identifying areas with shale gas potential. Indian personnel will be trained in assessing resources.

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