Photo by: Bloomberg
KOLKATA (miningweekly.com) - Two of India’s largest oil exploration and production (E&P) majors, ONGC Limited and Oil India Limited (OIL), are likely to be awarded new oil and gas blocks in the north-eastern provinces of the country through a preferential "government dispensation" route.
Considering the challenges of the terrain of the region and the strategic nature of the provinces given the international borders, the government was offering oil and gas assets to the national E&P operators with experience in the region, instead of offering them to private players through the auction route, a senior official in the Petroleum and Natural Gas Ministry said.
The Ministry was working on a comprehensive policy to ramp up E&P of oil and gas across the seven provinces that make up the north-eastern region of the country, and the preferential government dispensation route would be part of such a policy, he said.
In view of the strategic importance of the provinces rimmed with international borders with China, Myanmar and Bangladesh, which would need additional approvals from the national security establishment, the policy would frame a mechanism for the speedier grant of mandatory approvals that would be required by the government-owned E&P majors, he added.
However, sources in the oil and gas industry operating in the region said that domestic and foreign companies were reluctant to enter the north-eastern provinces where several extremist and secessionist forces were active, compounding the challenges posed by the terrain.
In fact, even domestic E&P operators, such as OIL and ONGC, faced difficulties, as the foreign companies they hired to conduct seismic studies had been forced to make an exit in the face of militancy and a lack of law and order enforcement, which had forced contractors to keep machinse and manpower idle over long periods, the sources said.
Simultaneously, domestic operators had to pay "hardship allowances" to its technical manpower for posting in the north-eastern region. Even so, the operators were hard put to find technical staff for conducting preliminary exploratory work in the region, the sources added.
ONGC produces around one-million tonnes a year of oil and gas from the seven north-eastern provinces, while OIL's production was estimated at around 3.466-million tonnes a year from its oil and gas fields, all awarded to the companies through the government nomination route.