India's ambitious oil, gas production target faces environmental roadblock

This is despite a committee headed by Cabinet secretary, including home, petroleum, environment directly looking into the issue of speeding up clearances for oil and gas assets
India’s ambitious target to increase domestic oil and gas production has hit the environment roadblock now.

Several assets under the discovered small fields rounds (DSF I & II) and open acreage licensing policy (OALP) are facing hurdles in getting clearances from environment, forests and wildlife departments.

According to sources, a few companies that got blocks under DSF-I are considering surrendering their blocks, too. This is because they are left with only three months to start production, based on the initial contract with the government. None of the DSF blocks started commercial production and a large chunk of them are yet to initiate works on the block too. Some are likely to apply for extension. 

Moreover, blocks of several companies in the North East, including that of Oil India and Anil Agarwal-led Vedanta, are stuck over forest and wildlife clearances.

This is despite a committee headed by Cabinet secretary directly looking into the issue of speeding up clearances for oil and gas assets.

One major point of difference between the oil ministry and the ministry of environment & forests (MoEF) is on whether “exploration” should be treated as “mining”. 

The directorate general of hydrocarbons has already written to the MoEF saying that exploration and mining should be considered as different activities. “The key issue is while the environment notification 2006 correctly treats oil and gas on a par with industrial projects, the forest and wildlife division of the same ministry treats oil and gas on a par with the open cast mining industry. This is causing innumerable hindrances and avoidable delays,” said a senior official from an exploration company.  

According to companies, there is no clear understanding within the government on the distinction between normal mining operations for ‘minerals’ and hi-tech drilling of wells activity for ‘mineral oils’ (crude oil and natural gas).

Mining of commodities, like coal and iron ore, is mostly an open-cast activity lasting for long years involving air, water and sound pollution.

Drilling of onshore wells for producing crude oil and natural gas is entirely different. 

“A well is drilled to insert a vertical pipe, which reaches the resource deep below, enabling crude oil and/or natural gas to gush out through their natural thrust. The crude oil/natural gas is then transferred elsewhere through closed subsurface pipelines. There is minimal environmental impact,” the official added.  

DSF bidders are in a spot with many of them forced to apply for extension or surrendering the blocks, with majority of blocks still stuck with environment and forest clearances. 

“My block already had environment clearance taken by ONGC. Later, it was carved into four blocks and given to four different players. The environment policies have forced us to take clearance for that block again, and in the process, exploration works are stuck,” said D S Rajput, managing director of South Asia Consultancy FZE, the only foreign company that participated in DSF-I. 

He added that despite three months left for the initial Directorate General of Hydrocarbons deadline, the company is unable to start operations while a mere consent letter would have allowed it to do so. Environmentalist, however, do not support the industry view. 

“It is a strategy by the government and companies to blame environment activists, whenever works are not happening. Besides, categorisation of petroleum and mining does not matter since the pollution cannot be labelled as less or more or if it is harmful to wildlife and forest,” said Xavier Dias, director, Ranchi-based Birsa Mines and Minerals Monitoring Centre.

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