by R. Sasankan
We
have often set the dovecotes aflutter with our hard-hitting columns on
controversial subjects. We seemed to have done it again last week with
our article titled Gas Migration Case: Regulators In The Dock which drew
a lot of plaudits. But what we were surprised by was the response from
one avid reader whose message seemed to impute that I had been strangely
silent when it came to exposing the real colluders in the gas migration
saga. Astonishingly, this comment emanated from a former senior
executive of the Oil and Natural Gas Corporation (ONGC). I quickly
protested that my column had not even accused the regulators of
collusion and the reason why we had decided to be a little circumspect
was the fact that we did not possess any direct evidence against them. I
was merely speculating on what the AP Shah committee would say in its
eagerly-awaited report on a such a burning issue. (The Committee’s
report is expected by the month-end).
My contention was that if the charge of collusion against the regulators
proved to be baseless, the ONGC management could come in for some
roasting. But if it was proven that the charge was valid, then the
regulators would have to face the music. My ONGC friend did not have any
problem with that. His question was simple: Could the previous
managements of ONGC duck the charge of collusion? He cited the sequence
of developments in my column to hammer this point home. I argued that no
one within or outside ONGC had so far levelled such a charge against
the previous ONGC leadership. I could not be expected to make one as I
am neither a technical expert nor have access to the papers, if any,
regarding interactions within ONGC on the subject.
But as a professional journalist commenting on developments in the
petroleum industry for many years, I decided to examine the merits of
his contention. I decided to bounce some questions off a cross-section
of
geologists and senior executives, past and present, in the oil
industry. The outcome of that enquiry forms the basis for this column.
In my previous column, I had written that Reliance Industries Ltd (RIL),
the operator of the adjacent block KG D6, had sought and secured
permission to carry out a 3D survey in ONGC’s block after completing a
similar survey in its own block. My understanding is that such
permission is a courtesy that is not unusual in the industry. In such
cases, the result of the survey is invariably shared with the parties
concerned.
The question here is whether RIL shared the survey results with ONGC or
whether ONGC ever made such a demand, either directly or through the
regulator. “Once a 3D survey was conducted, the results should have been
made available to all concerned. The Regulator cannot just look the
other way. And ONGC should have had the sense to demand the results of
the RIL findings,” said an acknowledged expert. There is nothing on
record to show that ONGC ever made such a demand. Industry veterans
contend that RIL is not an ordinary company. Its management has the
sharpest reflexes among all corporates in the country and, arguably, in
the world as well. Such a company would definitely be loth to help ONGC
by investing a lot of money on the 3D survey. It could be true that the
3D survey was not carried out with the intention to “suck out” ONGC’s
gas either. But the fact that RIL made such a request could have alerted
any corporate management. That simply did not happen in the case of
ONGC for some strange reason. I do not subscribe to the view that the
ONGC leadership had dull reflexes. Most of the officials I have
interacted with over the years have been simply brilliant by any
yardstick. But the moot question whether their sharpness had been dulled
by the political leadership which did not grant them the freedom to
display their professional competence.
As in other PSUs, ONGC has had its share of wheeler dealers in its top
management over the years, but their number was not disproportionately
high. I do not think that either R.S. Sharma or Sudhir Vasudeva, the
previous CMDs of ONGC, would have colluded in the despicable act of ‘gas
migration’. Most of the geologists ONGC had over the years were on par
with the best in the industry. Both Sharma and Vasudeva were respected
for their leadership qualities. Murli Deora was the petroleum minister
during the gas migration days. And let us not forget that R.S. Sharma’s
appointment was mired in controversy. The file recommending Sharma for
the post of CMD was returned to the ministry without the Prime
Minister’s approval. There was an attempt to foist Najeeb Jung as the
CMD of ONGC. Sharma went on record stating that he would not appear for
an interview again. Najeeb Jung was then an RIL employee, a fact that
many in the industry did not know. Neither did the Public Enterprises
Selection Board (PESB). Jung was perceived to enjoy the total backing of
RIL. Surprisingly, a news report from PTI divulged the fact that Jung
was an RIL employee, which wrecked his chances of becoming the CMD when
the PESB decided to hold fresh interviews for the position. PESB
chairman N.K. Sinha was furious. How could a rival company’s employee
become the ONGC’s CMD, he is believed to have wondered.
Sinha sent a message to Sharma, asking him to appear for the interview
and picked him again. Still, petroleum minister Murli Deora could have
rejected the recommendation, but he was intelligent enough not to
exercise that option. Sharma finally made it to the top slot in ONGC.
Sharma, exhausted by then, could not afford to do anything that would
annoy the minister. Being a finance man, Sharma would not have known
much about the interconnectivity of reservoirs. It was for the
geologists or reservoir engineers to bring it to his notice. Sharma had
under his leadership a director (exploration) who was physically fit and
functioning. But there is nothing on record to show that he ever
brought this to Sharma’s notice.
Sharma was succeeded by Sudhir Vasudeva, a production expert who was
well versed in the subject of interconnectivity of reservoirs. Vasudeva
also went through a hellish period before being appointed as CMD as his
rival in the race made things excruciatingly painful for him. He would
not have made it to the top without the help of Murli Deora. Taking up a
contentious issue like gas migration would have been extremely
difficult for him under the set-up that existed then. There is no
evidence to show that this was ever brought to his notice either. It is
here that present chairman D.K. Sarraf comes in. By filing a case
against RIL on the charge of sucking out gas from ONGC’s block and
dragging even the ministry of petroleum and natural gas to court for its
inaction, Sarraf has gone down in India’s public sector history as the
boldest chief executive it has ever had. But a question remains: while
accusing RIL of draining out ONGC’s gas and the regulators for colluding
in the despicable act, did Sarraf overlook the lapses of his former
colleagues? If he did so, did it rob some of the sheen off his stature?
Here again, there is no direct evidence. Sarraf is an Indian and an
attachment to former colleagues is a common Indian failing. (Former PM
V.P. Singh pardoned his former cabinet colleague Narasimha Rao for his role in the St. Kitt’s forgery case).
But some questions still remain: Who prevented the ONGC management from
demanding the results of the 3D survey that RIL had carried out in the
former’s block? Why didn’t ONGC order a 3D survey immediately after
granting permission to RIL to do so? When did it order the Survey
finally and why was it sitting on the results of its survey until Sarraf
came into the picture? True, Sarraf took the gas migration issue to the
court and levelled the charge of gas theft against RIL and collusion
against the regulators on the strength of evidence obtained after
drilling a well in the ONGC area under the guidance of international
consultant D&M. But even without drilling a well, the existence of
interconnectivity of reservoir can be observed through a 3D survey. This
is precisely what the Canadian company Niko Resources, the 10 per cent
partner in RIL’s block, did. It conducted the survey with the help of D
&M even before it formally invested in KG-D6 and told the Canadian
authorities about it in its periodic mandatory disclosures made a few
years ago. How come that ONGC geologists could not do so with its 3D
survey? This is what stoked my ONGC friend’s suspicion of collusion
which rests on two grounds: that ONGC did not ask RIL for the 3D survey
results and the fact that it did not promptly order a 3D survey. There
is certainly substantial merit in his contention. Still, it looks
difficult for me to impute that some key people in the ONGC management
were in cahoots with those who had decided to suck out gas from the
neighbouring field. A journalist needs solid evidence and ONGC hasn’t
given me any. At best, one may say that there was some laxity. When I
told an expert about my conclusion, he drily said: “Such laxity without
cause is inexplicable.”
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