Defence ministry may clear oil blocks: Moily

Last Updated: Fri, Feb 01, 2013 14:50 hrs

New Delhi, Feb 1 (IANS) The Ministry of Defence has given positive indications about clearing 39 oil blocks where exploration is stalled, Oil Minister M. Veerappa Moily said Friday.

"We have broken the ice with them (defence ministry). I don't think the logjam continues. Oil and gas activities and defence strategies can co-exist," Moily told mediapersons here.

The Ministry of Defence had classified six blocks in the K.G. basin in Andhra Pradesh -- including KG-D6 producing fields and one in NEC or North East Coast region (Reliance Industries' gas discovery area of NEC-25 -- as "no go" areas and put stringent conditions on 32 other blocks.

The Cabinet Committee on Investment in its first meeting Wednesday had asked the defence and petroleum ministries to iron out their differences on the matter within a month for the seven "no-go" blocks and within three months for the other 32 blocks.

"The clearance by the defence authorities will clear up nearly 32 blocks and will unlock nearly Rs.80,000 crore worth of investment. It will open up a big gateway of investment in the petroleum sector," Moily said.

He said it was common practice in several countries, including the US, that defence activities and oil and gas exploration co-existed.

"The defence ministry has a concern, which we are also concerned about. National security is important but at the same time oil and gas exploration and development is also necessary. When country after country is going ahead, why can't India," Moily asked.

He said that more than $14-15 billion have been invested in blocks like KG-D6, which is producing oil since 2008 and natural gas since 2009.

He said while companies are allotted large areas for exploration, the actual area used for production is only about four to five percent and the rest is surrendered.

The defence ministry had originally declared 14 blocks as no-go areas as they overlapped or were close to proposed defence sites. It later agreed for exploration permission in seven blocks in the Mahanadi basin.

Another block was cleared subsequently, bringing down the number of blocks awaiting clearance from 47 to 39.

More from Sify: