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Richa Mishra

New Delhi, Sept. 23The Ministry of Petroleum and Natural Gas has proposed constitution of a committee to monitor activities in blocks given on nomination basis to National Oil Companies (NOCs) — ONGC and Oil India Ltd (OIL).

This comes close on the heels of its modifying the monitoring mechanism for exploration and production activities of oil and gas blocks under the production sharing contract (PSC) regime.

Nomination blocks are those that have been awarded to the national oil companies before NELP and PSC regime.

Official sources said the Ministry has proposed that in line with the PSC regime, where petroleum operations are overseen by a management committee, for nomination blocks also such a committee may be constituted.

It has now been proposed that a management committee comprising Ministry representative; Director-General (DG), Directorate General of Hydrocarbons (DGH); and a director level representative from the NOCs concerned, be constituted for these blocks.

According to industry sources, “by putting its representative on the block management committee, the Ministry would be closely scrutinising the activities of the exploration and production companies.”

For New Exploration Licensing Policy (NELP) blocks, though, the DGH has been following a management committee mechanism comprising two central nominees and one nominee each from the consortium members.

The Ministry has now nominated a joint secretary level officer, along with the DG representative, as Government nominees.

The issue of monitoring oil and gas block for the PSCs had recently come under scrutiny, when a debate was generated on the mechanism for approving exploration and production costs, shifting of delivery points, and marketing of the find.

Questions were raised on the prevailing monitoring mechanism when the Government was considering the gas pricing formula submitted by Reliance Industries Ltd (RIL) for its Krishna Godavari gas discovery.

In its guidelines for the management of oil and gas resources for nomination blocks, the Ministry has proposed that the Director General, Directorate General of Hydrocarbons, will act as Chairman of the committee.

The Ministry has empowered the DGH to review and monitor the progress and performance of NOCs to the extent that optimal exploratory inputs are being provided in each of the petroleum exploratory licence (PEL) in accordance with international practice.

The guidelines also propose that the DGH may frame procedure for announcement of hydrocarbon discoveries and reporting of hydrocarbon similar to those for the PSC regime.

The DGH has also been given the responsibility of close monitoring of the development of hydrocarbon discoveries from these blocks. DGH has already been monitoring the reservoirs of major oil fields such as Mumbai High, Gujarat and Assam field of ONGC.

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