Gujarat politics hit ONGC plans for Olpad gasfield

Vol 11, PW 22 (20 Mar 08) People & Policy

It’s a sad twist of fate that the Cambay Basin, the most prolific gas–producing region in India, sits in a state controlled by the opposition BJP, while ONGC, which owns the best gas-producing acreage in Gujarat, takes its orders from the oil ministry in Delhi, controlled by the Congress party.

Curious, you might think, that this could get in the way of something as banal as gas production. But it does, often.

Everyone knows, for example, that Gujarat Congress stalwart and junior oil minister Dinsha Patel is no friend of BJP icon and Gujarat chief minister Narendra Modi. In December’s state elections, Patel fought and lost a bitter battle against Modi in the latter’s Maninagar constituency of Ahmedabad.

Fall-out from this rivalry is nowhere more keenly felt than at ONGC’s operations in Gujarat, particularly at the Olpad gasfield, discovered in March 1963, some 15-km northwest of Surat. Olpad produces only 1000 cm/d today, but could produce much more.

About a year ago, ONGC struck significant quantities of gas from three of four wells, drilled 700 metres sub-surface in the Miocene-era Babaguru sands. Excited, ONGC began talks with GSPC - which had already signed an earlier contract for 150,000 cm/d of future production - for an additional 150,000 cm/d from Olpad.

For ONGC, the deal was a â€کwin-win’. “ONGC was required to deliver the gas only at the well head,â€‌ we hear.

“It would have been transported to Suvali through the 6-km Cairn India pipeline. The compressors too would have been installed by GSPC.

â€‌ ONGC wanted $5.70 per mmbtu and talks were about to proceed when suddenly, unexpectedly, and quite mysteriously, an order came from the oil ministry to abort negotiations with immediate effect. Some say GSPC managing director DJ Pandian sought oil secretary MS Srinivasan’s intervention, but to no avail.

Others are unsurprised. “Things would be much better,â€‌ reflects an observer, “if Gujarat and the country were ruled by the same party.