Ministries at loggerheads over NELP

Serious differences have cropped up between the defence ministry and the petroleum ministry over allowing companies from some specific count...

Serious differences have cropped up between the defence ministry and the petroleum ministry over allowing companies from some specific countries in participating for bidding in the ‘sensitive’ blocks under the fourth round of new exploration licensing policy (NELP). While the defence ministry has expressed its reservations for obvious security concerns against entry of companies from countries like China and Pakistan among others, the petroleum ministry favours a free entry by foreign companies.

According to sources, the defence ministry is of the view that companies from China, Pakistan, Burma, Indonesia, Malaysia, Bangladesh and the entire Arab world be kept out of bidding for certain oil and gas blocks due to security concerns. The suggested restrictions by the defence ministry was related to offshore blocks around the Andaman Islands.

This suggestion came during the inter-ministerial consultations to finalise oil and gas blocks to be offered under the fourth round of NELP. The government is likely to offer around 25 oil and gas blocks, including a couple of them in the Andaman offshore area, under NELP IV.

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In fact, the defence ministry is also believed to have suggested that the Indian firms should lead the consortiums (bidding for blocks in Andaman offshore), as majority shareholder.

According to officials in petroleum ministry, the ministry takes necessary clearance from the concerned ministries (including environment, defence, finance and law) while finalising blocks for bidding under NELP rounds. However, the recent suggestion by the defence ministry in NELP IV could create problems and hinder entry of foreign firms in the bids. The ministry is opposed to the blanket ban and cited the example of public sector ONGC Videsh Ltd (OVL) taking 25 per cent stake in a producing oil field in Sudan where the partners were Chinese and Malaysian national oil companies. Petronas of Malaysia and CNPC of China had waived off their first right of refusal to make way for OVL in the Greater Nile oil project.

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