Uncertainty over oil-gas blocks after Defence Min objections

Uncertainty over oil-gas blocks after Defence Min objections

Spread over 50,000 sq kms in the east coast of India, the KG-Basin is estimated to have gas reserves up to 14 trillion cubic feet. However, due to the ministry objections, explorations between these blocks, identified as potential for drilling in the basin in the recently concluded NELP bidding, were put on hold.

“The defence ministry did not give clearance to three in KG Basin and one block in Orissa coast. The Directorate General of Hydrocarbons (DGH) already identified 40 blocks for NELP-X, including three blocks in KG-Basin. The ministry might object to another three blocks, taking the total to seven,” a senior official of Petroleum Ministry told PTI on the condition of anonymity.

Andhra Pradesh's plans of making a foray into the oil and natural gas sector were hit due to the objections from the ministry. ONGC could not take up exploration work in two of its already allotted KG-Basin blocks as it could not get Defence clearance.

“There is no progress on the issue despite several meetings between the senior officials of both the Defence and Petroleum ministries. Hence, the matter has to be resolved either at the Prime Minister level or cabinet committee level,” sources said.

The Petroleum minister Murali Deora was replaced by Jaipal Reddy when the issue came for consideration. Recently S Sundareshan was replaced as petroleum secretary by Girish Chandra Chaturvedi. "The issue many may take a backseat once again," the official said.

Similarly, three other blocks are likely to meet a similar fate in the upcoming NELP-X, as DRDO is planning to set up a missile testing unit at Machilipatnam at southern end of KG-Basin, while on the northern end, Indian Navy wants to set up a Naval Port for its regular exercises at 60 km south of Visakhapatnam, headquarter of eastern naval command.

Sources said, the DGH, in the recently concluded the ninth round of New Exploration Licensing Policy (NELP IX), could not offer any blocks in the KG-Basin as MOD did not give clearance.

The DGH, which put up 33 blocks for auction in NELP-IX, may offer as many 40 blocks comprising ten blocks in West coast and 30 on shore in the tenth round which is likely to be announced in December.