The Telegraph
Since 1st March, 1999
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Naik wrestles with oil hunt riddle in Andaman

New Delhi, April 18: Petroleum minister Ram Naik visits Port Blair on Saturday amidst continuing differences between the defence establishment and the petroleum ministry over allowing foreign companies to hunt for oil in the offshore area surrounding the strategic Andaman islands.

Sources said that Naik had also met defence minister George Fernandes recently to sort out the tangle. However, there is deep resentment in the defence establishment over what is being seen as the petroleum ministry’s attempt to bulldoze its way through “despite serious security implications”.

Although Naik’s mission to Andaman is related essentially to the inauguration of Indian Oil Corporation’s LPG bottling plant, it is also expected to give him a first-hand feel of the ground realities there when he interacts with the military top brass of the country’s only tri-services command. The force comprises elements of the navy, army and air force like the US military set-up.

The new LPG bottling plant will improve the logistics of the tri-services command on the island and is not based on commercial considerations as the cost of supplying petro goods to the islands is very high. The Islands currently ferry their LPG either from Calcutta or Chennai.

The venture is modelled on similar lines to the oil depot that IOC has set up in Leh after the Kargil war to beef up the logistics of the army and air force. Situated at 10,000 feet above sea level, this is one of the highest oil depots in the world. No private company working purely on commercial considerations would have ventured there.

However, it is the “hard commerce versus security” debate that the defence establishment and petroleum ministry have got entangled in as far as the upstream oil exploration sector is concerned.

The defence ministry, on the advice of the Indian Navy, has stipulated that the offshore area around the Andaman islands should be explored only by Indian companies. Foreign companies should come in only under extremely exceptional circumstances and that too as junior partners of Indian companies.

The petroleum ministry, however, is thinking “global” and wants to float an international tender to invite foreign companies for oil exploration in Indian waters. Its argument is that this will enable the country to invite more foreign capital in a high-risk venture.

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