Scrapping the Ratna award will send the wrong signal

Vol 10, PW 22 (08 Mar 07) People & Policy

Most agree that oil minister Murli Deora would be making a disastrous mistake by scrapping the Ratna award.

“It is bad enough that the contract is yet to be signed 11 years after the fields were awarded,â€‌ says an observer. “Reviewing or scrapping the award at this stage would not be good.

â€‌ Any move to deny Premier and Essar the fields would send negative signals to the very same overseas oil and gas companies that Deora is so assiduously courting. Nothing prevents the ministry from cancelling the award and returning Ratna to ONGC, or re-tendering it, but Premier and Essar would most likely protest in the strongest terms, using all means at their disposal.

Unflattering newspaper headlines would show the oil ministry in a poor light, particularly if the field was returned to ONGC, with its poor record of reserves accretion. Such a move would also tell the world that the award of a competitively won field in India has little sanctity.

Under normal circumstances the award of upstream acreage leads to a PSC. But if Deora decides otherwise for Ratna and the field is returned to ONGC what certainty is there that development could begin promptly Does ONGC have the human and other resources to invest in Ratna when it has huge work programme commitments elsewhere The answer, clearly, is no! Previous chairman Subir Raha was determined to win back Ratna at any cost.

But this is not so today. “ONGC is not at all being obstructionist,â€‌ says a source.

“And rightly so. It has its hands full.

They have a lot of work to do at the Mumbai High where they have lost a FPSO (Crystal Sea).â€‌ More, Premier’s magnanimous decision to share operatorship with ONGC on the PMT model has also succeeded in winning support at the state-owned company.

“ONGC is more than willing for the PSC to be signed and development work to begin right away,â€‌ we hear. Joint operatorship, we are told, “will draw the best from all parties in the consortium.