The Telegraph
Since 1st March, 1999
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Ministries lock horns over gas hunt

New Delhi, Feb. 2: The petroleum ministry is baffled over a finance ministry move, routed through the Prime Minister’s Office, “to set up a formal task force comprising senior civil servants to give greater momentum to the exploitation of indigenous and other gas reserves”.

At its presentation to the Prime Minister tomorrow, the petroleum ministry will essentially attempt to protect its own turf. The ministry has been asked to make this presentation.

According to sources, the finance ministry proposal states that the new task force will look at ways to reduce red tape in the hydrocarbon sector.

The petroleum ministry will highlight the fact that with the introduction of the New Exploration Licensing Policy (NELP) it has removed red tape.

Under this policy, 70 contracts for exploration of oil and gas blocks have been signed in the last three years compared with 22 contracts signed in the 10 years preceding this period. This is expected to bring in an investment of Rs 14,500 crore into the upstream sector. The figure could go up as and when further discoveries are made.

Senior petroleum ministry officials are of the view that red tape or the terms of the NELP are not keeping foreign firms away from oil exploration here. The fact is Indian geological structures are not considered as a major hydrocarbon destination by global oil majors, hence they have not come in for exploration.

Smaller companies, such as, Cairn Energy of the UK and Niko Resources of Canada in partnership with Reliance have made some discoveries which could bring about some change in the mindset. But a major oil discovery will have to be made in India to attract global majors such as Exxon-Mobil, British Petroleum or Petronas.

These companies are interested mainly in discovered oilfields. British Gas is a case in point. The company has replaced Enron in the western offshore Panna-Mukta oilfields and Tapti gas fields. However, it is here that the petroleum ministry may come under fire.

For close to a year, ONGC has not been able to convince BG that it does not have any automatic right to replace Enron as the operator. As the dispute goes on, further investment to increase the output of the Tapti gas fields has been held up.

Similarly, there is a dispute with Cairn Energy and Videocon Consortium operating the eastern offshore Ravva oilfields over a Rs 1,000-crore payment due to the government.

All these fields were discovered by ONGC and later given to private firms on the basis of production sharing contracts in the mid-1990s.

According to sources, the petroleum ministry will showcase the achievements of ONGC-Videsh at the meeting. The ministry will highlight the Sakhalin-I success story.

As much as 5 million tonnes of crude per annum and 8 million standard cubic metres of gas per day will be flowing from this Russian offshore field from 2005.

This will bring in earnings to the tune of Rs 6,200 crore for ONGC-Videsh every year. Similarly, the Vietnam gas-fields discovered by ONGC and the more recently acquired 25 per cent share in the Sudan oilfield are expected to add another Rs 3,000 crore each year.

According to sources, the petroleum ministry will impress upon the Prime Minister that this would not have been possible if red tape had not been removed and the approval mechanisms expedited to match the short time required by ONGC-Videsh to grab these opportunities. Earlier several opportunities were lost due to time-consuming procedures.

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