The Cabinet today did not take up approval to UK's BP buying 30% stake in Reliance Industries' 23 oil and gas blocks, including the showpiece KG-D6 gas fields, for $7.2 billion.
The Cabinet Committee on Economic Affairs (CCEA) did not take up the issue despite oil ministry pushing for it since yesterday and moving a note for consideration of the panel this morning, officials privy to the development said.
Information and Broadcasting Minister Ambika Soni after the weekly Union Cabinet meeting told reporters that the CCEA meeting did not take place today.
Officials said the Finance Ministry, in an unprecedented move, had in its comments on the note oil ministry had moved earlier this month seeking nod for the Reliance-BP deal, asked about preconditions that can be imposed while giving approval.
It had in particular flagged if a guarantee can be taken from the Europe's second-biggest oil firm that it will reverse the sagging output from KG-D6 fields.
The Oil Ministry on July 19 sent a supplementary note for CCEA stating New Exploration Licencing Policy, under which Reliance had won the oil and gas blocks, allowed for sale or assignment of participating interest, known as farm-out.
Officials said the Cabinet Secretariat yesterday evening sent back the note saying the issue of imposition of preconditions, as had been raised by the Finance Ministry, had not been adequately addressed.
The Oil Ministry moved a note just before the weekly Cabinet meeting took place this morning but it was felt that proper and timely notice has to be given for any matter to be considered by the CCEA, which is a sub-panel of the Cabinet that considers economic issues, they said.
A proper notice is necessary as any member of the CCEA desirous of making comments can come prepared for the meet, they said adding because of the lacunae, the CCEA did not consider the proposal and deferred it.
Officials said the fault in not addressing the issue of preconditions lies at the door of oil ministry as it was their job to clarify that such no explorer in the world can guarantee enhanced output or a discovery.
Even in NELP where global bids are floated seeking companies to investment in oil and gas hunt, the government does not take a guarantee that the investment would result in a discovery or increased output.
In case of KG-D6, where output has falled from 61.5 million standard cubic metre per day (mmscmd) to 47 mmscmd over past one year due to sub-surface technical issues, BP can add value and hope to improve production. But in case such conditions are imposed, BP may not come and the output will remain were it is. Besides India will be deprived of its largest ever foreign direct investment (FDI).
