Defence Min classifies RIL's KG-D6 block as "No-Go" area
New Delhi: Reliance Industries and its partner BP plc's KG-D6 gas fields and gas discovery area NEC-25 are among 14 oil and gas blocks that have been declared "No-Go" areas by the Defence Ministry, barring any exploration or production activity.
Ministry of Defence has either withdrawn or withheld clearances for 47 oil and gas blocks. Of these, 14 have been classified as "No-Go" areas, sources privy to the development said.
RIL-BP's KG-DWN-98/3 or KG-D6 block has been declared as "No-Go" as it overlaps with a proposed Naval base.
KG-D6, which was awarded to RIL in 2000 by the Cabinet after clearance from all ministries concerned, had been producing oil since September 2008 and gas from April 1, 2009.
RIL-BP's Mahanadi basin block NEC-OSN-97/2 (NEC-25) where sizable gas discoveries have been made, too has been classified as "No-Go" area as it is close to missile launching range/air force exercise area.
Sources said the other 12 "No-Go" blocks are with state- owned ONGC, Cairn India and Australia's BHP Billiton and reasons cited for withdrawing clearance including being close to missile launching range, overlapping with proposed Naval base, with the Naval firing range and Air Force exercise area.
Companies like RIL have already invested USD 15 billion since 2000 and the Ministry of Defence has now withdrawn or withheld clearance to them.
Sources said the newly constituted Cabinet Committee on Investment (CCI) is likely to consider this week giving clearance to 47 oil and gas blocks where the Defence Ministry has either withdrawn clearances or put stringent conditions.
Finance Minister P Chidambaram had last week indicated that the CCI would for the first time meet before the end of this month in which clearances to oil and gas blocks would be considered.
Sources said the Oil Ministry has moved a note for CCI arguing that non-clearance of blocks will lead to disputes and arbitrations between the government and the companies, which will effect the investment climate and may severely impact the future growth of the sector.
As per the Production Sharing Contract (PSC) signed between the government and the companies like RIL, damages for breach of the contract can be sought.
Besides the 14 "No-Go" blocks, the Defence Ministry has imposed stringent conditions in respect of 32 exploration blocks.
Sources said the stringent conditions imposed include companies not locating any pipelines or structures on sea surface in the blocks cleared for exploration and production activities.
Subsea/submerged permanent structures, if any, are to be located more than 100 meters below sea surface or outside the DRDO/Indian Air Force danger zone area (on sea surface) or Naval exercise areas, they said adding the conditions were impractical.
For one block, clearance has been denied by the Commerce Ministry.
The Oil Ministry feels that non clearance of the blocks would lead to exodus of foreign companies who were brought with assurance of conducive investment environment and would lead to loss of credibility for the government besides adversely impacting investment climate and litigations.
It sought CCI's approval for relaxation of stringent conditions in respect of 32 exploration blocks and clearance of 14 "No-Go" blocks.