Unresolved issues overshadow NELP-VII in London

Vol 11, PW 18 (24 Jan 08) People & Policy

Overseas roadshows to promote India’s NELP-VII begin today (Thursday) January 24 at the Landmark hotel in London.

Back home, several UK oil companies already here might have a thing or two to say about their experience on the ground, dealing with the oil ministry. BP, Premier Oil and Cairn India are all battling to get a simple â€کyes’ or â€کno’ to three very different questions, which if answered, would go some way in dispelling the perception that the oil ministry is crippled with inertia, incapable of taking decisions.

Premier’s story is the most depressing: twelve years after winning the Ratna and R Series of fields, the oil ministry still refuses to sign a PSC that would see an additional 20,000 b/d added to national production within months. Despite approvals from the law, planning and finance ministries, the oil ministry refuses to budge.

Cairn’s grudge is more recent, but equally poignant. Will the oil ministry allow â€کcost recovery’ to its proposed $800m crude pipeline from the Rajasthan oilfields to the coast Cairn submitted a request in April 2007, but to this day, has heard nothing, despite approval from all ministries except, funnily enough, the oil ministry.

BP’s position is no less amusing. After promising to spend $2m of its own money on seismic and agreeing to transfer proprietary knowledge for a joint study of offshore Kutch block GK-DW-1 with ONGC, BP quite rightly asked for and received an iron-clad commitment from the all-powerful Empowered Committee of Secretaries (ECS) for the right to match any competing bid for a stake in the block.

Normally ECS decisions are set in stone, but not this time. When it returned to the oil ministry, the ECS recommendation was overturned.

Talk to government officials and they’ll tell you Ratna, GK-DW-1 and the Rajasthan fields are pre-NELP assets with pre-NELP problems; that such problems are unlikely with NELP-VII contracts. Should you believe them Probably, yes.

But for Premier, Cairn and BP, that’s little consolation. All three are now waiting for cabinet to take a call because the oil ministry is too scared to decide on its own.