Just in time as ministry prepares PMT directive

Vol 6, PW 23 (29 Jan 03) People & Policy

MOVES TO END this tedious squabble have not come soon enough.

Shastri Bhawan is getting increasingly impatient at the intractable positions of ONGC and BG and is taking legal opinion on how to step in and resolve the row. Of particular concern is the impact on production from the fields.

Additional production of gas from Tapti was scheduled to begin in July this year, according to a 2001 development plan first submitted by former operator Enron. But thanks to the squabble additional gas is unlikely before mid-2005 "even if development work starts today." In total the development plan envisages an incremental 2.5m tonnes of oil and 3.5bn cubic metres gas from the fields - now delayed by at least two years.

Determined to prevent further delay, a source confirms that the oil ministry has discreetly spoken to the law ministry to assess its options under the PSC, the Oil Field (Regulation & Development) Act, 1948 and the Petroleum and Natural Gas Rules, 1959. Among the options under review are: a government "directive" to the contractor to produce additional oil and gas; removing control of the field from the "contractor" and handing it over to a third party; or denying operatorship to BG within the consortium.

According to a source, the law ministry is telling the oil ministry it is within its right toissue "directives" to the "contractor" but only after amendment of the Petroleum and Natural Gas Rules. It can also remove the "contractor" but only after termination of the exisiting PSC.

Finally, it can deny operatorship to BG only if ONGC and Reliance demand it.