Saurabh Chandra is India’s new petroleum secretary3 min read . Updated: 01 Mar 2014, 12:17 AM IST
Chandra, who will replace Vivek Rae, is moving to oil ministry at a time when the ministry is confronting several contentious issues
New Delhi: Saurabh Chandra, secretary in the department of industrial policy and promotion (DIPP), is moving to the ministry of petroleum and natural gas at a time when the ministry is confronting several contentious issues.
Chandra, a 1978 batch Uttar Pradesh cadre Indian Administrative Service (IAS) officer, replaces Vivek Rae, who retired on Friday. Chandra confirmed that he would take over on Saturday as secretary in the petroleum ministry, but declined further comment.
He is moving to the ministry at a time when the petroleum sector has come under the scanner. The high-profile ministry’s image has been tainted by allegations levelled by Aam Aadmi Party chief Arvind Kejriwal, who in his short stint as Delhi chief minister (CM) targeted alleged irregularities in the sector.
As CM, Kejriwal ordered the anti-corruption arm of the Delhi government to register first information reports (FIR) against Reliance Industries Ltd’s (RIL’s) chairman Mukesh Ambani, Union minister for oil and natural gas M. Veerappa Moily and former minister Murli Deora, among others.
Kejriwal accused RIL of conspiring with some members of the government to create an artificial shortage of gas in the country and raise prices of gas produced in the Krishna-Godavari basin. Both Moily and RIL have rejected Kejriwal’s allegations.
Chandra also would have to handle the vexed issue of whether to stick to an existing production-sharing agreement with oil and gas explorers or move to a new revenue-sharing one, with support emerging for both proposals. Explorers want the existing contract to continue.
A committee led by former finance secretary Vijay Kelkar had recommended the continuation of the present production-sharing contract (PSC) framework that allows explorers to recover their costs before they pay the government its share.
That recommendation went against another proposal, made previously by another high-level panel headed by C. Rangarajan, who heads the Prime Minister’s Economic Advisory Council, that India move to a revenue-sharing regime.
In a separate development, the petroleum ministry on Friday approved a new policy for geo-scientific data generation for hydrocarbons in Indian sedimentary basins which will help in boosting oil and gas output.
“Under the policy, permission for conducting geo scientific data survey will be granted by way of a non-exclusive multi-client survey agreement. This policy replaces the earlier model of profit sharing after cost recovery with a one-time project fee. Directorate General of Hydrocarbons will administer this policy on behalf of the government of India(GOI)," the petroleum ministry said in a statement.
The government plans to assess India’s hydrocarbon resources across all the 26 sedimentary basins, covering an area of 3.14 million sq. km. The last such exercise was carried around 20 years ago in 15 sedimentary basins.
“Government of India will continue to be the owner of the data acquired under this policy. The Service Provider shall complete the survey within a period of 2 years. The agreement with the service provider shall remain valid for a period of 12 years from the effective date during which period the service provider will be free to license the data to prospective E&P companies," the petroleum ministry statement added.
This comes in the backdrop of waning interest in the Indian hydrocarbon sector, with around 70% of Indian basins remaining largely under-explored. Even response to the new exploration licensing policy (Nelp) has been tepid.
Nelp was approved by the government in 1997—it kicked off in January 1999—in an effort to boost hydrocarbon exploration in the country. Under Nelp, the government allocates rights to explore hydrocarbon blocks through a bidding process and has done this in nine phases so far for 360 blocks, with an investment of around $21.3 billion. The petroleum ministry has offered 46 hydrocarbon blocks on the revenue sharing model under the 10th Nelp round.
“Inviting private investors for exploration is handicapped by the non-availability of data and hence the need to acquire geo-scientific data in respect of all the sedimentary basins so as to accelerate Exploration and Production (E&P) operations," the petroleum ministry said. Investors have given the thumbs-down to the Indian hydrocarbons sector, as was seen in the exit of BHP Billiton, the world’s largest miner, from its blocks in India. Also, the ninth round of Nelp auctions turned out to be a low-key affair, with one block even failing to elicit a bid. Only 13 of the 33 blocks on offer could be awarded.