Millennium Post

Centre approves 25 oil blocks worth $4.61-billion investment

After clearing five ‘No-Go’ areas for oil and gas exploration, the Cabinet Committee on Investment (CCI) on Monday eased stringent conditions imposed by Defence Ministry on another 25 blocks, freeing $4.61 billion investments. ‘The CCI at its meeting held on Monday cleared 25 exploration and production blocks for continued exploration of oil and gas, out of 31 blocks where work had been stopped on account of security restrictions imposed by Ministry of Defence,’ an official statement said here.

While the statement did not give a break-up of the blocks cleared, the 31 blocks where restrictive conditions were imposed included 13 of the Reliance Industries Ltd-BP combine, 15 of state-owned Oil and Natural Gas Corp (ONGC) or its lead consortium, two blocks of Santos of Australia and one block of Cairn India-led consortium. For these blocks, the Defence ministry had 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 Defence Research and Development Organisation (DRDO)/Indian Air Force (IAF) 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 now.

‘Out of 31 blocks, nine blocks have been fully cleared and 16 blocks have been cleared with specific conditions. Due to clearances given at this meeting, investment already made to the extent of $2.71 billion will be put to use and further investment to the extent of $1.9 billion will be made in the exploration activities in the next three to five years,’ it said.

The statement said earlier that out of the total 40 blocks where oil and gas activities were stopped for want of clearances from Ministry of Defence and Ministry of Commerce, one block was cleared by Ministry of Commerce which had overlapped with an SEZ area.

In all, eight blocks including Reliance Industries’ Krishna Godavari basin KG-D6 block that has been in production since September 2008, and gas discovery area of NEC-25 in the North East Coast (NEC) region, were declared ‘No-Go’ zones for reasons like overlapping with proposed Naval base or being close to missile launching and Air Force exercise area.

The CCI at its meeting on March 21 cleared five of these blocks for oil and gas activities. The blocks were declared ‘No-Go’ after several years of oil and gas hunt which led to more than two dozen discoveries and one of them, RIL’s KG-D6 started production nearly five years ago.

The CCI at its March 21 meeting gave clearances to oil and gas exploration in five blocks — KG-DWN-98/3 or KG-D6, NEC-OSN-97/2 or NEC-25, KG-OSN-2001/1 (all of RIL), KG-OSN-2009/3 of Cairn India and KG-OSN-2009/4 of state-owned Oil and Natural Gas Corp (ONGC).

The three remaining blocks — KG-OSN-2005/1, KG-OSN-2005/2 of ONGC and KG-DWN-2009/1 of BG Group of UK — ‘will remain NO-GO areas for the exploration and production activities due to national security considerations’.

On account of this clearance, investment already made to the extent of $10.71 billion will be put to use and further investment to the extent of $0.6 billion is envisaged in the next few years. Together with Monday’s decision, $13.42 billion of expenditure already incurred and another $2.5 billion envisaged has been freed.
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