The long-standing logjam between Petroleum and Defence Ministries over exploration activities in 39 offshore oil and gas blocks seems to be nearing resolution as both of them have reached a consensus on allowing production in 90% of the reserves, a move which is likely to give a boost for future investments in the sector, both domestic as well as foreign
According to sources familiar with the development, during recent consultations held between both the ministries, the Petroleum Ministry has agreed to forego some of the 39 blocks (where it has agreed to Defence Ministry’s view that these are situated in strategically sensitive areas), while “very positive” progress has been made on 90% of the reserves.
Though refusing to divulge details, sources added that by the time the next meeting of the CCI takes place, the issue of allowing exploration activities in around 90% of the reserves would definitely be resolved. Official sources informed that discussions with the Defence Ministry took place on all the 39 blocks and except for some of the reserves; a majority of blocks could see a consensus emerging regarding allowance of exploration activities in them.
The fresh impetus to the long-standing dispute between both the ministries was provided by Prime Minister Manmohan Singh-headed CCI, which was recently formed to put on fast track big ticket infrastructure projects worth Rs 1,000 crore and more.
During the CCI’s inaugural meeting held on January 29, the issue of these 39 blocks was taken up and according to sources, both the ministries were asked to clear all the differences among themselves within a specific timelines and come back to the panel with concrete and positive results in a month’s time. With sources indicating a “very positive” outcome of the deliberations between the two ministries, the issue could see a resolution during the meeting of the CCI.
Once exploration activities are allowed in these blocks, it would help in easing investments to the tune of around Rs 1,600 crore, which have been put in these reserves by several companies including BP Plc and Reliance Industries Ltd (RIL) since 1999, when they were first auctioned by the Government.
The vexed issue of seeking defence clearance on exploration activities in these 39 blocks, many of which are situated in the Krishna Godavari (KG) basin, has been hanging fire since quite some time when the South Block officials after initially okaying development of these blocks, withdrew the permission at a later stage citing strategic and security issues.
The Defence Ministry prevented the companies from indulging in any exploration activity by declaring six blocks in KG basin and one in North East Coast (NEC) region as “no-go” areas, while on the remaining 32 blocks it placed several stringent conditions.
According to sources, the seven “no-go” blocks belong to ONGC while the remaining 32 blocks on which several conditions have been imposed are with various private entities including some which are co-owned by BP and RIL and from where both the companies have made substantial gas discoveries in the recent past.
The Defence Ministry while putting the seven ONGC blocks under “no-go” criteria cited reasons like they being close to missile launching range, overlapping with proposed Naval base, overlapping with Naval firing range and Air Force exercise area.
In fact, the withdrawal of permission for exploration of these 39 blocks by the Defence Ministry had come after the companies had done all the initial spadework like geological survey, drilling of wells and setting up of permanent structures around the reserves.
The Petroleum Ministry’s point during its discussions with Defence Ministry was that it could not stop exploration in these blocks after the companies had put in a substantial amount of investment. The Defence Ministry on its part over the past few years remained steadfast on its point that these blocks are situated too close to its strategic establishments in the Bay of Bengal.
According to sources familiar with the development, during recent consultations held between both the ministries, the Petroleum Ministry has agreed to forego some of the 39 blocks (where it has agreed to Defence Ministry’s view that these are situated in strategically sensitive areas), while “very positive” progress has been made on 90% of the reserves.
Though refusing to divulge details, sources added that by the time the next meeting of the CCI takes place, the issue of allowing exploration activities in around 90% of the reserves would definitely be resolved. Official sources informed that discussions with the Defence Ministry took place on all the 39 blocks and except for some of the reserves; a majority of blocks could see a consensus emerging regarding allowance of exploration activities in them.
The fresh impetus to the long-standing dispute between both the ministries was provided by Prime Minister Manmohan Singh-headed CCI, which was recently formed to put on fast track big ticket infrastructure projects worth Rs 1,000 crore and more.
During the CCI’s inaugural meeting held on January 29, the issue of these 39 blocks was taken up and according to sources, both the ministries were asked to clear all the differences among themselves within a specific timelines and come back to the panel with concrete and positive results in a month’s time. With sources indicating a “very positive” outcome of the deliberations between the two ministries, the issue could see a resolution during the meeting of the CCI.
Once exploration activities are allowed in these blocks, it would help in easing investments to the tune of around Rs 1,600 crore, which have been put in these reserves by several companies including BP Plc and Reliance Industries Ltd (RIL) since 1999, when they were first auctioned by the Government.
The vexed issue of seeking defence clearance on exploration activities in these 39 blocks, many of which are situated in the Krishna Godavari (KG) basin, has been hanging fire since quite some time when the South Block officials after initially okaying development of these blocks, withdrew the permission at a later stage citing strategic and security issues.
The Defence Ministry prevented the companies from indulging in any exploration activity by declaring six blocks in KG basin and one in North East Coast (NEC) region as “no-go” areas, while on the remaining 32 blocks it placed several stringent conditions.
According to sources, the seven “no-go” blocks belong to ONGC while the remaining 32 blocks on which several conditions have been imposed are with various private entities including some which are co-owned by BP and RIL and from where both the companies have made substantial gas discoveries in the recent past.
The Defence Ministry while putting the seven ONGC blocks under “no-go” criteria cited reasons like they being close to missile launching range, overlapping with proposed Naval base, overlapping with Naval firing range and Air Force exercise area.
In fact, the withdrawal of permission for exploration of these 39 blocks by the Defence Ministry had come after the companies had done all the initial spadework like geological survey, drilling of wells and setting up of permanent structures around the reserves.
The Petroleum Ministry’s point during its discussions with Defence Ministry was that it could not stop exploration in these blocks after the companies had put in a substantial amount of investment. The Defence Ministry on its part over the past few years remained steadfast on its point that these blocks are situated too close to its strategic establishments in the Bay of Bengal.
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