CCI likely to clear 31 stringent areas for oil, gas activity

After clearing five "NO-GO" blocks including Reliance Industries' producing KG-D6 gas fields, the the Cabinet Committee on Investment (CCI) is likely to clear 31 other areas of stringent conditions imposed for oil and gas activity.

 

The Defence Ministry had classified eight areas including KG-D6 and RIL's gas discovery area NEC-25 as "NO-GO" areas and placed stringent conditions in respect of 31 exploration blocks.

 

The CCI last week cleared five the NO-GO areas including RIL's KG-D6 and NEC-25 for exploration and production of oil and gas areas, the issue of 31 blocks will come up for the panel in a week's time, Oil Minister M Veerappa Moily said the National Editors' Conference here.

 

"Mutually agreed solution has been arrived at and the matter will be put before CCI in one weeks time," he said.

 

The Defence Ministry had previously imposed stringent conditions like asking companies not to locate any pipelines or structures on sea surface in the blocks cleared for exploration and production activities.

 

Subsea/submerged permanent structures, if any, were to be located more than 100 metres below sea surface or outside the DRDO/Indian Air Force danger zone area (on sea surface) or Naval exercise areas.

 

The oil industry saw these conditions as impractical and after discussions, the conditions have been substantially diluted.

 

He said about $2-3 billion investment has been committed in exploration of these 31 areas.

 

Originally, "clearance of 73 blocks awarded under New Exploration Licensing Policy (NELP) since 1999 was stalled due to security issues, involving estimated hydrocarbon reserves of 6 billion tons," he said.

 

Subsequently, 34 blocks were cleared. The recently constituted Cabinet Committee on Investment last week considered eight NO-GO areas and cleared five of them. The issue of 31 blocks will come up before it in next one week, he said.

 

Oil Secretary Vivek Rae said the three blocks which have not been cleared for exploration include two of state-owned Oil and Natural Gas Corp (ONGC) and one of BG Group of UK. The Production Sharing Contracts (PSC) signed for the three blocks will now be rescinded and contracts cancelled.

 

"Not much investment had taken place in the blocks and appropriate compensation mechanism is being worked out," he said.

 

The options include reimbursing all of the investment they have made or giving the companies suitable exploration blocks in lieu of the cancelled ones. A third option is allowing the firms to recover the investment they have made in the cancelled block from government's share in areas under production.