The Telegraph
Since 1st March, 1999
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Ministries squabble over oil hunt in Andaman

New Delhi, March 27: Serious differences have erupted between the defence and petroleum ministries over a proposal to allow foreign companies to enter the offshore hunt for oil in the strategically sensitive Andaman Islands area.

Sources say the defence ministry wants to completely bar companies from Malaysia, China and Pakistan from oil exploration in this area and has stipulated that other foreign oil majors can come in only as minority partners of Indian companies.

The Andaman Islands is a vital defence base for protecting the Bay of Bengal and China is keen to spread its influence in this area. The Chinese already have a presence in Coco islands, near the Andamans, where they have installed powerful communication equipment and built an air-strip. These islands actually belong to Myanmar, but Beijing has used its influence with that country to establish a base.

China also has close military ties with Pakistan. It has been allowed to develop a sea-port at Gwadara, near Karachi, which virtually straddles the Persian Gulf. This has given rise to some concern for the Indian Navy as most of the country’s crude oil imports move on that route.

Malaysia is a country which has, of late, developed close links with Pakistan’s ISI and strengthened its ties with India’s hostile neighbour. “The manner in which the Malaysian government treated the Indian software engineers and insulted our high commission officials who went to plead their case only goes to reinforce this point,” a senior defence ministry official said.

India’s only tri-services command, which includes elements of the army, navy and the air force, has been set up at the Andamans due to the strategic importance of the area. The defence ministry, therefore, does not want to dilute the tight security ring in the region.

The petroleum ministry, on the other hand, has expressed the view that it is offering the offshore blocks as part of the new exploration licensing policy through the global tender route. Imposing any restrictions would deter foreign firms from investing in oil exploration in the country, which is a high-risk investment that requires the latest technology.

It has reportedly furnished the argument that ONGC has a share with the Malaysian and Chinese national oil companies in the lucrative Greater Nile oilfield in Sudan. “However, this is not likely to cut much ice with the defence ministry as having a partnership with these companies in a foreign country is not the same as having them operating in your backyard,” a senior official said.

The Indian Navy also considers the seismic data generated in the course of oil exploration to be highly sensitive. This data can indicate various “hiding areas” in the sea into which hostile submarines can sneak in and lie undetected.

The defence ministry also wants to impose the condition that the oil companies should not be allowed to send this data outside the country for further processing. However, the petroleum ministry is of the view that since state-of-the-art processing facilities are not available in the country, this could seriously hamper efforts to find oil.

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