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Govt move to protect ONGC deal in Iraq

New Delhi, June 7: The government is building up a strong legal case aimed at persuading the US to honour, under the “due process of law”, a Saddam Hussein-authored deal allowing ONGC to drill at a Western Iraq oilfield.

A senior petroleum ministry official told The Telegraph, “The ‘due process of law’ was scrupulously followed in the award of this oil exploration block and this will now stand us in good stead.”

“In fact even Indian law and the British system on which it is based do not give the same pride of place as the US to the ‘due process of law’ clause,” he added. India plans to highlight the fact that the production-sharing contract for oil exploration Block 8 was ratified by the Iraqi Parliament (majlis). The agreement allowing ONGC-Videsh to undertake oil exploration in the block was signed by the two countries after protracted negotiations stretching over several months.

Since it is an exploration block, a considerable amount of time and investment is required before oil is discovered, if at all. This is quite different from discovered fields which are sources of instant profit. Hence, there is no reason to believe that the block was awarded on the basis of extraneous considerations.

ONGC had already started work with the analysis of the seismic data pertaining to the block and would like to carry the task through to its logical conclusion.

ONGC-Videsh, in partnership with Reliance Industries and Sonatrach of Argentina, had also completed negotiations with the Iraqi government for a stake in the Tuba oilfield in southern Iraq and the deal was in the “final stages”.

Petroleum ministry officials claim that this is different from several contracts that were in the nascent stages and which were more likely to be cancelled. Besides, the size of the field is relatively small and it may not interest the big western companies. The fields in which the Russians have a stake, for instance, are much bigger.

The ministry of external affairs is spearheading the move to defend Indian interests in Iraq. The petroleum ministry has set up a special cell on Iraq-related issues headed by a joint secretary.

With the main contracts for the reconstruction of Iraq in the hands of the US companies such as Bechtel, the Indian companies will be vying for sub-contracts that will now be farmed out. Engineers India Ltd, Indian Oil, Gail and ONGC will be looking for such sub-contracts in the oil sector.

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