New Delhi: The government has barred any joint venture which has investments by companies from China, Pakistan and Bangladesh from participating in the ninth round of the new exploration and licensing policy (Nelp).
The move, directed by the defence ministry, comes at a time when the government is concerned about the country’s security and just ahead of the auctions expected to begin in October.
Nelp auctions began in January 1999 to boost oil and gas exploration and reduce India’s dependence on hydrocarbon imports. The government?allocates rights to explore blocks through auctions under the programme. No companies with Chinese, Pakistani or Bangladeshi partners have won blocks in earlier rounds.
Giving its go-ahead for some blocks of Nelp-9, the ministry of defence in a communication on 2 August to the petroleum ministry and reviewed by Mint, said. “Joint venture participation by companies from China, Pakistan and Bangladesh, either directly or by proxy, will not be accepted... Such companies are to be discreetly excluded during initial phase.”
Clearances are required from the ministries of environment and forests, coal, defence, finance, home affairs, external affairs, and petroleum and natural gas before the bidding process can begin.
The petroleum ministry had sought clearance for deep-water and shallow-water offshore blocks. Approvals were given for five blocks (D1, S1, S5, S6 and S7) by the defence ministry in consultation with naval headquarters.
The defence ministry communication also stated: “No data, raw or processed, is to be provided to any foreign agency or taken abroad without the approval of the MoD (ministry of defence/integrated headquarters of the ministry of defence (navy)).”
The communication was addressed by D.K. Banerjee, deputy secretary in the defence ministry, to D.N. Narasimha Raju, joint secretary in the petroleum and natural gas ministry.
While Raju did not respond to a message left at his office, a senior defence ministry official, who did not want to be identified, said the Indian Navy was concerned about the location and ownership of the vessels involved in exploration work, and the nationalities of the people manning the vessels.
“We are essentially concerned with figuring out the antecedents of the hardware that is used for exploration and of the people who man those vessels. In addition to this, the location of the project is also important. Only once we are clear about these details, do we give clearance to such exploration projects,” the official said.
India has oil and gas reserves of 28-32 billion tonnes across 3.14 million sq. km and 26 basins. It imports 75% of its requirements and accounts for some 3.5% of global consumption.
The spokespersons for the Chinese embassy and Pakistan high commission declined to comment. Habib-ur-Rehman Khan, commercial counsellor in the Bangladesh high commission, also declined to comment.
Nelp-8 received 76 bids for 36 of the 70 blocks on offer. In Nelp-9, the government will offer fewer blocks.
“India has explicit restrictions on foreign direct investment from Pakistan, and has denied automatic approval route to Bangladesh,” said Gokul Chaudhri, partner at audit and consulting firm BMR Advisors Pvt. Ltd. “The presence of such barriers will restrict healthy cooperation from developing in cross-border energy projects, including constraints in accessing the gas assets and corridor in Bangladesh.”
Under Nelp, 71 oil and gas discoveries have been made in 21 exploration blocks with in-place hydrocarbon reserves of at least 600 million tonnes of crude oil equivalent. The total committed investment in the Nelp rounds for exploration so far is around $10 billion (Rs.46,400 crore today), of which $5.3 billion has already been spent.