Siberian ghosts return to haunt RS Butola

Vol 14, PW 16 (10 Feb 11) People & Policy

Siberia is a word incoming IndianOil chairman RS Butola would no doubt like to forget.

PETROWATCH learns OVL’s controversial acquisition of Imperial Energy when Butola was managing director is the principal reason holding up his appointment as IndianOil chairman, which he should have assumed on February 1. On January 21, just two days after oil minister Jaipal Reddy was appointed, his counterpart in the law ministry, Veerappa Moily, forwarded a complaint from Dr.

MS Rao, a chief geologist based at ONGC’s Karaikal asset in Pondicherry, alleging gross financial impropriety in the $2.1bn (Rs10,500cr) acquisition of Imperial. In his letter, Moily asks the oil ministry to investigate Dr.

Rao’s principal allegation: gross negligence by ONGC chairman RS Sharma and Butola in paying $2.1bn when the company’s real worth is just $870m. Claiming to speak for 22,000 employees in ONGC, Dr.

Rao refused to say why he had written the letter, when contacted by this report. Luckily for Butola, no one in the oil ministry is taking much notice of this latest complaint, saying Butola’s appointment as IndianOil chairman is a formality, as it has been cleared by the Appointments Committee of the Cabinet and the Central Vigilance Commission.

Last week, we hear, a meeting was called in the ministry, attended by oil secretary S. Sundareshan, where it was decided that Butola had no case to answer, and that his appointment as Indian Oil chairman should proceed.

“No adverse comment was made on Butola’s file,” we hear. In 2008, OVL paid $2.1bn for Imperial Energy on a peak production assumption of 80,000 b/d – a hopeless figure that looks increasingly farcical.

On February 8, ONGC sources confirm that actual production from the four fields operated by Imperial in western Siberia is 16,000 b/d, and that it will remain 16,000 b/d for the foreseeable future.