With three of its oil blocks in the Krishna-Godavari basin still to get clearances, Oil and Natural Gas Corporation (ONGC) is likely to invoke the force majeure clause on its contractual obligations to the government.
By invoking the legal escape route, a company says it cannot meet what it had earlier committed to, due to circumstances beyond its control. In this case, explained an ONGC official, there were milestones laid down by the sector regulator, the Directorate General of Hydrocarbons (DGH). If not met, fines could be imposed.
ONGC has been unable to begin exploration activity in these blocks due to objections raised by defence and aerospace agencies. It is expected to receive only conditional clearance for these blocks by the middle of next month from DGH, following consultations with the ministries concerned a fortnight earlier, said Chairman and Managing Director Sudhir Vasudeva.
The conditional clearance implies a part of the space under these blocks may have to be relinquished by the company.
Work on two of the Nelp-7 blocks and a couple won by ONGC, with others, in the Nelp-8 round of allocations in the K-G Basin had got stuck after the department of space and the defence ministry opposed exploration activity in these areas. This was much after the government awarded these blocks to oil companies. Defence and aerospace agencies have strategic interests in the Bay of Bengal abutting the K-G Basin. The headquarters of the eastern naval command, a satellite launch pad and a proposed missile testing range are all in this area.
Other fields
On the positive side, the company has filed the declaration of commerciality for the 98/2 block, adjoining the successful D6 block being operated by Reliance Industries, with DGH. A detailed appraisal for going ahead with development of this block is due. “The company will start commercial production in this deep sea block in 2016-17,” Vasudeva, here in connection with a biennial international conference and exposition on petroleum geophysicists, said yesterday.
On the uncertainties on operations in Sudan and Syria, the chairman said the dispute in sharing the oil pie between North and South Sudan would be resolved soon, but it was difficult to say anything at this stage about the Syrian operations. Operations in these two countries account for 25 per cent of ONGC Videsh’s production abroad.
