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Future of oil drilling in KG Basin uncertain after MoD objects

Future of oil drilling in KG Basin uncertain after MoD objects
PTI
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First Published: Sun, May 15 2011. 05 02 PM IST
Updated: Sun, May 15 2011. 05 01 PM IST
Hyderabad: Following the defence ministry’s objections to exploration of certain oil and gas blocks in the Krishna-Godavari basin, as they lie between two proposed defence establishments, uncertainty is looming large over the further offering of blocks in the prolific basin.
Spread over 50,000 square kilometres along the East Coast of India, the KG Basin is estimated to have up to 1,130 million metric tonnes of oil and oil-equivalent gas, or approximately 60 trillion cubic feet of natural gas, according to the Ministry of Petroleum and Natural Gas.
However, due to the defence ministry’s objections, not a single KG Basin block identified as having oil and gas production potential was put up for auction in the recently concluded New Exploration Licencing Policy (NELP) bidding round.
“The defence ministry did not give clearance to three (blocks) in KG Basin and one block in Orissa coast. The Directorate General of Hydrocarbons (DGH) already identified 40 blocks for NELP-X, including three blocks in the KG Basin. The ministry might object to another three blocks, taking the total to seven,” a senior official of the petroleum ministry said on the condition of anonymity.
As a result of the MoD’s objections, ONGC has not been able to take up exploration work in two of its already allotted KG Basin blocks as it could not get defence clearance.
“There is no progress on the issue despite several meetings between senior officials of both the defence and petroleum ministries. Hence, the matter has to be resolved either at the prime minister level or Cabinet committee level,” sources said.
At the time the issue came up for consideration, petroleum minister Murli Deora was replaced by S Jaipal Reddy. More recently, S Sundareshan was replaced as petroleum secretary by Girish Chandra Chaturvedi. As a result, “The issue may take a backseat once again,” the official said.
Three other blocks are likely to meet a similar fate in the upcoming NELP-X oil and gas licencing round, as the DRDO plans to set up a missile testing unit at Machilipatnam, at the southern end of the KG Basin, while on the northern end, the Indian Navy wants to set up a naval port for its regular exercises 60 km South of Visakhapatnam, the headquarters of the Eastern Naval Command.
Sources said the DGH, in the recently concluded ninth round of the New Exploration Licensing Policy (NELP-IX), could not offer any blocks in the KG Basin as the MOD did not give clearance.
The DGH, which put up 33 blocks for auction in NELP-IX, may offer as many 40 blocks -- comprising ten blocks on the West coast and 30 onshore -- in the tenth round, which is likely to be announced in December 2011.
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First Published: Sun, May 15 2011. 05 02 PM IST
More Topics: Defence Ministry | Oil | K G Basin | ONGC | NELP-IX |