Conspiracy theory over oil ministryآ’s extension policy

Vol 10, PW 2 (18 May 06) People & Policy

Wild conspiracy theories are flying thick and fast about the motives behind the oil ministrys policy on extension to exploration work programmes.

Favourite among them is that the policy has been instigated by MNC oil and gas companies keen to snatch away some of the blocks now held by Reliance and ONGC, which together won the bulk of acreage in past NELP rounds. Domestic upstream operators are convinced that the MNCs are behind this, says a source.

These MNCs did not get any blocks in any of the five NELP rounds held so far. Now they want some of the offshore blocks awarded in the previous NELP rounds, especially those in the eastern offshore.

Reliance and ONGC have the maximum exploration acreage from the earlier NELP rounds and, these MNCs have now woken up to the prospectivity of the eastern offshore and want some of the action. So the theory goes, MNCs are waiting for ONGC and Reliance to relinquish some of these blocks in line with the stiff terms in the new extension policy.

Once Reliance and ONGC relinquish these blocks the MNCs will grab them. Hints are circulating that if the oil ministry does not back off Reliance and ONGC could go to arbitration.

Reliance and ONGC argue that it is unfair to penalise them for not completing their minimum work programmes on time. No operator can complete the work programme when the market is so tight, we are told.

Rigs and services are either just not available or are available at exorbitant rates and in periods that are unsuitable for local operations. When NELP was formulated, we are told, global crude was around $10 per barrel.

Today it is around $75 per barrel, we hear. Everybody is rushing to produce oil.

We are told the oil ministry should make allowances in the extension policy for the present tight market conditions. Will the ministry agree See below.