Cautious Deora still undecided on Cairn RoU request

Vol 11, PW 7 (09 Aug 07) People & Policy

Patience is a virtue Cairn India will need to cultivate in good quantities when dealing with oil minister Murli Deora (left).

Four months ago Cairn asked the oil ministry if it could shift the delivery point of Rajasthan crude to a point outside the field boundary. But Cairn is still nowhere nearer getting the official letter giving it permission.

After passing through several layers of ministry red tape, PETROWATCH learns the request is sitting on Deora’s desk, enjoying the sun for the past five weeks. Both the ministry’s exploration division and super-efficient oil secretary MS Srinivasan support Cairn’s request, but Deora, it seems, is not convinced.

In his by now customary indecisive fashion, we hear the venerable former mayor of Mumbai is hesitating before putting his signature to the file. Cairn has also applied to the ministry for RoU (Right of User) permission to lay a pipeline from the Rajasthan fields to Vadinar on the Gujarat coast.

This too remains unsigned. Why is Deora hesitating If the delivery point is shifted and included in the field development plan, operator Cairn and 30% partner ONGC can claim cost recovery â€کup front’ - bad news for the government, as it would mean amending the PSC.

Since cost recovery is allowed, inevitable â€کfinancial implications’ would result. “Deora is always cautious when a proposal involves major legal changes such as amending the PSC,â€‌ says a source.

“He is doubly cautious if the government is likely to lose money.â€‌ This, we are told, is “typicalâ€‌ Deora behaviour.

“He does not want to be responsible if anything goes wrong,â€‌ adds our source. “He wants to be completely sure he is doing the right thing.

â€‌ Result: Cairn must wait patiently. As it waits patiently, Cairn is making good use of its time.

Talks continue with Indian Oil to sell its Rajasthan crude, despite denials from a senior IOC source, dismissed as bluster by the oil ministry. “Either you have not spoken to the right person (at IOC) or you are being misled,â€‌ exclaims a senior bureaucrat.

“The pipeline RoU proposal to Vadinar has been approved specifically to allow Cairn to mix its crude with other crude used by IOC. Otherwise Mundra would have been the obvious port.