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'There is a campaign to kill DGH as an institution'

Source : BUSINESS_STANDARD
Last Updated: Wed, Oct 14, 2009 19:50 hrs

The battle between the two Ambani brothers over gas supplies from the Krishna-Godavari basin off the Andhra Pradesh coast has spilled over into the petroleum ministry, with the Director General Hydrocarbons (DGH) V K Sibal coming under direct attack for allegedly favouring Mukesh Ambani's Reliance Industries Ltd (RIL). In a free-wheeling interview with Jyoti Mukul, Sibal makes a case for his innocence and blames the media campaign by the Anil Ambani group for the current controversy. Excerpts:

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Controversies have surrounded your office for a long time and now you are in the midst of what was earlier a fight between the two brothers. How did this happen?

DGH is the nerve-centre of the exploration and production industry (E&) in the country. All the activities that take place in this sector are centred in this office. The major issue in the fight between the two brothers that began in 2005 concerns gas supplies from the Krishna Godavari D6 field and all the approvals for this have been given by the management committee that works with the DGH. With so much mud-slinging, it is automatic [that the DGH would be drawn into the controversy]. It started with the DGH allowing gold-plating. From then on the DGH became a pawn in the entire game.

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There are charges that you and your daughters have taken favours from RIL...

It started with my daughters staying at the guest house. I have been saying that neither I nor my family owns any property in Mumbai. My daughters paid rent and utility charges for a flat they took on rent. All this has been hyped to make their [Anil Ambani's] case stronger that the development plan for the D6 field [which RIL is developing], which was an addendum, has been approved for such favours. Do you think for approving Rs 50,000 crore, someone will take a favour of having their daughters stay in a guest house? This baffles me.

The addendum field development plan is an engineering plan and not a cost estimate. Costs are seen to determine the techno economic viability of the project. What we benchmark is the per-barrel cost with a capital expenditure of $8 billion. It is the lowest cost for D6. If we had gold-plated the costs, then how did the per-barrel cost became comparable or the lowest in the world? The accusations are part of a malafide campaign to kill DGH as an institution, even though it has done wonderful work by bringing two fields into production. We had revised the Cairn plan three times. Why was there no complaint on it? And why are these complaints coming now that my extension is due? Why not in 2006 or 2007 or 2008?

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You have complained to the home minister that you are under threat, to which the Anil Ambani group has said that it will sue you for defamation. How do you react to this?

It is my perception. My family has been targeted. Somehow I feel threatened. As DGH, it is my duty to see development plans are approved and they are pointing fingers at that.

Now they have filed a special leave petition. And who is defaming whom?

Right from 2005, round the clock in the media there has been a campaign. I do not have that kind of money to file a suit. D6 is a good field and god's gift to the country. Instead of cashing on it, we have made a fool of ourselves.

You have also complained against the Central Vigilance Commission.

I have not complained but written a letter that guidelines have not been followed. Under the guidelines, any complaint that comes six months before the renewal of somene's tenure is not to be entertained. I respect the process but why has the system been compromised? My image has been tarnished without any proof. Forget about V K Sibal, they want to kill DGH as an institution. One of the reasons that bids did not come is that the image of DGH has been tarnished.

You are perceived to be close to RIL. How do you react to that?

They have done beautiful work from project management to technology. A person who is meritorious gets extra attention in a class. I am impressed by their management. This project has been rated the best by experts. The reason I talk more about Cairn and RIL is because I want merit to become contagious and others should learn from it.

Both you and petroleum minister Murli Deora have been accused of favouring RIL.

It is only from one group and it is against the whole ministry of petroleum and not just one person. I can assure you that never have Murli Deora or Mani Shankar Aiyar ever asked me for any favour for RIL or Cairn. The kind of independence and respect I have enjoyed is commendable. Let us be responsible and solve conflicts rather than create them.

You have said that the fight and misinformation campaign has affected the latest bidding round under the New Exploration and Licensing Policy (NELP). Do you think international companies care about the fight between two brothers?

It has impacted the exploration and production industry. If our own corporate giants question the validity of a production sharing contact, why should others come? The fight is not important. The signals are wrong. It is not only E& but the entire industry that will be affected.

It is said that the government'restrictions on pricing and marketing freedom led to the poor response...

For the price, the government is the third party. Article 21.6 of the production sharing contract clearly says the government will consider the price arrived at an arm's-length relationship. That is what has happened and we have not deviated an iota from it. Like the stock market that works on rumours, any industry works on signals. In E&, by now we had stabilised but with this there is suddenly a rupture.

Ever since you assumed office in November 2004, you have been courting controversy. Earlier with ONGC and GSPC. How do you explain this?

Whatever I said about them has come out true. GSPC said they found 20 trillion cubic feet but now that they have submitted their field development plan it is not even 3 tcf. We have set standards and brought discipline the business.

Is it something to do with your personality?

I am straightforward. I am a person who takes things head-on. You can say this is my weakness or strength. But all my life I have worked like this. Look where DGH is now, the kind of investment that has come into the sector. In my tenure, we have given out 10 times the size of acreage that was given out earlier. I know I worked hard and the brand that has been created. We have speeded up the process of electronic certification for custom clearance. It used to take a lot of time. About Rs 40,000 crore worth of clearances are given out every year. What hurts me is that only one party is complaining. We have approved 19 development plans. A person who has approved a Rs 50,000 crore development plan gets only guest house accommodation. Is it not a joke? An inquiry should be made against the people who have made complaints with malafide intentions.

You recently said RIL discovery will be four times the estimated size of 80 million standard cubic metre a day. How did you come to that conclusion?

Each well is giving 6-7 mscmd against the approved 1.5 mscmd. The field is much better and the per unit cost of production will come down since earlier they were suppose to produce from 50 wells. It is the jewel in the E& sector. We have been studying the whole field. Right now, more is not being produced since allocation has not been made but that is dangerous and is not good for the reservoir health. Gas reserves go up when production starts.

Is interest in NELP diminishing?

This is not the case. Response for NELP VII and VIII was not good due to controversies surrounding tax and other things. No acreage is prospective unless you evaluate the data. Exploration is not an exact science.

Was the timing of NELP VIII wrong considering that there was global slowdown?

Anybody can say anything. In a downturn, economic activity should increase. Exploration cannot take a break and that is the reason the round was launched. For companies, it was good to bid since competition is less. Prices are still high and $60-70 a barrel is not low. The idea of having smaller blocks is to have more players and develop the industry.

What is the kind of investment that has gone into NELP?

About $20 billion has been committed and $8-12 billion has already been invested. It has started giving dividends. Gas will play a major role and this is going to be a gas century.

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How has your tenure been?

I am not pessimistic. I have worked for India brand and also created the Sibal brand. People respect me for the innovative ideas. This is the best job V K Sibal could have got. I have worked to my best and credit also goes to my team. Personally, I am not hurt. Even if I go, I am proud of the work I have done.




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