Ministry of Defence clears RIL gas blocks

In a major relief to Reliance Industries, Defence Ministry has agreed to relax the ‘No-Go’ zones imposed on its producing KG-D6 gas block and discovery block of NEC-25 in Bay of Bengal and permitted oil and gas activities with certain conditions.

The Ministry of Defence had in all declared 7 blocks, including RIL's Krishna Godavari basin KG-D6 block and gas discovery area of NEC-25 in the North East Coast region, ‘No-Go’ zones for reasons like overlapping with proposed Naval base or being close to missile launching and Air Force exercise area.

While MoD has relented on RIL blocks, five other areas of state-owned Oil and Natural Gas Corporation, BG Group of UK and Cairn India will continue to be under ‘No-Go’ areas and no oil and gas activity will be allowed, official sources said.

Sources said 30 per cent of the 7,645 square kilometer KG-DWN-98/3 or KG-D6 block in the Krishna Godavari basin overlapped with the Navy's firing and exercise area and was branded a ‘No-Go’ zone by the Ministry of Defence.

MoD was of the view that any exploration and production activities near its Naval Base would hamper surveillance and detection operations and the noise generated due to exploration activities would also compromise the sonar and other radar functionalities.

RIL agreed to relinquish 495 sq km of area that fell in the ‘No-Go’ area, following which Navy agreed to realign the boundary required for naval operations for its proposed base to allow oil and gas activities in the remainder of the block.

Sources said the change of heart came as Oil Ministry pushed very hard saying KG-D6 block has been producing oil since September 17, 2008 and gas from April 1, 2009 after obtaining all requisite approvals.

About 60-70 per cent of the NEC-OSN-97/2 (NEC-25) block fell within the 50 km radius of the Chandipur Missile launch pad and about 50 per cent of the block fell within the danger zone of the Balasore Air-to-Air Firing Range of the IAF.

Oil Ministry aggressively stated that 6-7 discoveries made in the block could not be exploited because of lack of clearance, MoD cleared the block subject to area within 100 km radius from the Integrated Test Range, Chandipur, will still be under the ‘no-go’

zone. No exploration and production activity will be permitted in this zone. Beyond the ‘no-go’ area, oil and gas exploration activities will be permitted.

However, ONGC's two KG basin block KG-OSN-2005/1 and KG-OSN-2005/2 have not been cleared as they fall directly within the boundary of the proposed naval base. Also, the firm's KG-OSN-2009/4 block fell within the range of DRDO's Machhlipatnam launch site and IAF's Suryalanka Guided Weapon Firing Range.

BG's block KG-DWN-2009/1 falls right at the entry of the proposed naval base and hence the Navy could not grant clearance while Cairn's KG-OSN-2009/3 block was in the proximity of the Suryalanka GWFR.

Besides classifying seven blocks as "No-Go" areas, the MoD imposed stringent conditions for another 32.

The newly constituted Cabinet Committee on Investment in January-end had asked MoD and Ministry of Petroleum and Natural Gas to sort out differences over the seven block in one month and for the 32 areas in three months.

Sources said the Petroleum Ministry was of the view that oil and gas exploration and defence activities can co-exist as was the practice in several countries, including in US.

Originally, the Defence Ministry had declared 14 blocks as ‘No-Go’ areas as they over-lapped or were close to proposed Naval base or missile launching range/air force exercise area.

But the Defence Ministry later relented and agreed for exploration to be permitted in 7 blocks in Mahanadi basin.

One more block which had previously objected to by the Commerce Ministry too had been cleared, bringing down the number of blocks awaiting clearances from 47 to 39.

Sources said companies like RIL had already invested close to USD 16 billion in the 39 blocks since 2000 after getting approval from the Defence Ministry at every stage -- first for beginning seismic survey, then for drilling wells and then for constructing permanent oil and gas facilities.

Oil Ministry officials insisted that Defence Ministry cannot withdraw the clearance after 12 years of exploration.

Blocks like KG-D6 were awarded to companies since 2000 by the Cabinet after clearance from all ministries concerned including the Ministry of Defence.