PMO steps in to resolve row over oil, gas exploration

After giving clearance last year, Defence Ministry throws a spanner in the works

The Prime Minister's Office has been forced to call an emergency meeting to resolve a showdown between the Petroleum and Natural Gas and Defence ministries, which has stalled exploration work on several offshore oil and gasfields — something critical to India's energy security.

Last year, the Defence Ministry gave clearance for beginning work on eight offshore oil and gasfields in the Eastern and Andaman offshore zone — part of a tranche of 34 blocks which were offered to prospectors.

The bids were won by several Indian and multinational companies.

However, the Defence Ministry has refused to allow exploration, saying any activity could jeopardise naval operations. Internal documents of the Petroleum Ministry obtained by

The Hindu show that the Navy, at a series of meetings held in August and September 2011, said the exploration would “hamper naval exercises.”

Naval sources said the objections centred round the fact that the exploration would take place in the areas being used for submarine manoeuvres and training.

The documents show that the Navy imposed restrictions on three blocks in the Eastern and Andaman offshore zone, after first agreeing that exploration could begin there.

The auction was held in the ninth round of the New Exploration Licensing Policy, under which multiple auctions have been held since it was put into effect in 2000.

“The three blocks were carved out and offered under NELP IX after obtaining Defence clearance issued by the Naval headquarters vide their note No. NI-04/0025/2010 dated September 15, 2010,” says a Petroleum Ministry note (dated August 19, 2011).

“On the basis of clearances given by the Defence Ministry vide note dated September 15, 2010 all necessary actions were taken, including printing of bid documents and giving advertisements in newspapers, inviting bids for 34 blocks under NELP IX.”

At meetings held in July and August, the Navy's representative was told “that if restrictions are imposed now in respect of these two blocks, then it may invite criticism and the credibility of Indian policies will be lost.”

The documents show that the Navy agreed to review its stand, while the Petroleum Ministry said it would point out the areas where no oil exploration was being planned — but no action was taken till December 23, 2011, when the last of a series of meetings was held.

Now, the Principal Secretary to the Prime Minister is scheduled to hold a meeting later this month in a last-ditch attempt to end the standoff.

In a December 23 note to the Directorate-General of Hydrocarbons, Petroleum Ministry Under Secretary R.S. Sikdar has asked it to come out with a comprehensive note having a background and status update with reference to each block for the PMO meeting.