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New Delhi: Although the government had promised to strengthen the office of Directorate General of Hydrocarbons (DGH) after the Comptroller and Auditor General of India (CAG) criticized them for their failure to provide adequate oversight, the petroleum ministry is against allowing the directorate to raise its own cadre.

DGH, overseen by the oil ministry, is a body that manages the petroleum resources of the country. It is manned by staff drawn on deputation or tenure basis, mainly from state-owned firms in the energy business such as Oil and Natural Gas Corp. Ltd and Oil India Ltd.

“There is a move to revamp the DGH. Among other proposals is a move to have officials on the DGH’s roles as against people on deputation or as consultants. The idea is of institution building," a government official said, requesting anonymity.

However, the petroleum ministry is against any such move.

“It is not possible," said a top petroleum ministry official who, too, declined to be named.

In September 2011, the CAG in its performance audit report of hydrocarbon production-sharing contracts (PSC), said the petroleum ministry and the DGH, “did not pay adequate attention to protecting—at every stage of E&P (exploration and production), be it exploration, development or production—Government of India’s financial interests."

The constraints of adequately skilled resources with the oil ministry and the regulator for monitoring several hundred such contracts simultaneously cannot also be ignored, the report said.

Apart from monitoring around 235 PSCs, DGH’s role assumes importance given the increasing need for expediting domestic exploration. While a total investment of $15.88 billion has been made in India’s hydrocarbon exploration and production sector, there are also concerns about the time lag between discovery of and production from so-called nomination blocks—potential oil and gas fields that were awarded without auction to the state-owned hydrocarbon explorers and producers. While recoverable crude oil and natural gas reserves in the country are estimated at 736.45 million tonnes and 1,119.55 billion cu.m, respectively, their exploitation isn’t keeping pace with growing demand. DGH also helps the government bid out blocks through the new exploration and licensing policy (Nelp) rounds and is setting up a national data repository, which is an integrated database on India’s hydrocarbon potential that will help the country move away from periodic auctions for exploration rights to round-the-year bids.

“The burgeoning demand of hydrocarbons in India necessitates aggressive exploration of reserves. Licensing policies, however, coming in the way of finds is not uncommon in the world. Therefore, creating institutional capacity is an imperative," said Deepak Mahurkar, leader oil and gas PwC India, a consultancy. “Indian E&P regulatory system modelled around Norway; NPD has its own cadre. The capacity of the organization is deployed with mindset of ownership and the commitment. Application of right and various skills is required in regulatory function and they are best developed within," he said.

shubham.s@livemint.com

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