Nagaland not yet ready with new PEL rules

Vol 13, PW 19 (11 Mar 10) People & Policy

Explorers interested in India’s remote north-east state of Nagaland will have to wait a while longer.

PETROWATCH learns authorities in this tiny state on the border with Myanmar are still working on the details of a new set of rules that will govern future Petroleum Exploration Licences (PELs) and Petroleum Mining Leases (PMLs). These should have been finalised last month by a seven-member multi-party committee set up by the state government - but the February 15 deadline has come and gone.

“We have been given an extension till April by the cabinet,â€‌ TR Xeliang, Nagaland minister for planning, co-ordination and parliamentary affairs and head of the panel tells PETROWATCH. Xeliang said the panel’s second meeting, held in January was inconclusive because the state’s geology and mining department was unable to provide information demanded by the panel on ONGC activity in the state since it was kicked out by separatist militants in 1994.

Xeliang tells us he is particularly concerned about reports that ONGC resumed seismic activity in the state in October 2007 without first signing a MoU with the state government or securing approval from the state cabinet. In 2001, claims Xeliang, the Nagaland cabinet approved a resumption of E&P activities by ONGC on the strict condition that it should first sign a MoU with the Nagaland state government.

“Before this could be done,â€‌ adds Xeliang, “ONGC just went ahead.â€‌ A draft MoU was prepared by the state’s chief secretary in 2006 “but ONGC did not sign it,â€‌ says Xeliang.

Frustration with ONGC, he says, is prompting the state government to actively consider whether to cancel all the old PELs awarded to ONGC and start afresh - or simply modify the existing ones. Another sticking point is royalty payments on a barrel of crude from future ONGC production.

Current royalty rates, feels the state government, are too low.