The Telegraph
Saturday , February 2 , 2013
Since 1st March, 1999
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Oil tussle solution in sight

New Delhi, Feb. 1: The inter-ministerial difference between the petroleum and defence ministries on strategic concerns have now narrowed to seven hydrocarbon blocks from 39 following the crucial meeting of the Cabinet Committee on Investments (CCI).

“We have broken the ice. I don’t think you can say (logjam continues)... oil and gas activities and defence strategies can co-exist,” oil minister M. Veerappa Moily told reporters after the first meeting of the CCI.

He said the defence ministry had classified seven blocks as “no-go” areas for oil and gas exploration and production activities and had imposed stringent conditions for another 32.

The seven “no-go” blocks include Reliance’s KG-D6, which has been in production since September 2008, and its gas discovery block NEC-25 for being on a proposed naval base or being close to a missile launching and Air Force exercise area.

The officials of the two ministries will be meeting in the coming weeks to find a solution for the seven blocks as some are already into production and any negative step could impact investment in the high risk hydrocarbon sector.

The seven blocks are Reliance’s KG-DWN-98/3 (also called D6), KG-OSN-2001/1 and NEC-OSN-97/2; BG’s KG-DWN-2009/1 and KG-OSN-2005/1; ONGC’s KG-OSN-2009/4 and KG-OSN-2005/2.

Moily is confident that issues relating to the seven blocks would also be sorted out. “I don’t think there will be a problem. We will sort it out. This (defence clearance to the 39 blocks) will open up Rs 80,000 crore of investment (and) open up a big gateway of investment in the petroleum sector,” he said.

“They (defence ministry) have a concern, which we are also concerned about. National security is important (but) at the same time oil and gas exploration and development is also necessary,” he said.

Diesel rates

Oil firms will hike diesel prices by 40-50 paise a litre every month till the time they bridge the gap between the market price and government regulated ones.

“Until further orders, oil marketing companies can increase it (diesel price) by 40-50 paise (per litre) every month,” Moily told reporters here.

Diesel is currently sold at a loss of over Rs 9.22 per litre.