Since we uploaded the previous column titled Russian roulette: Regulator
stares down a barrel, Oil and Natural Gas Corporation (ONGC) made a
startling allegation before the A.P. Shah Committee that Mukesh
Ambani-controlled RIL drilled a well 50 metres close to the border
between the two Production Sharing Contract (PSC) blocks, KG D6 and KG
D5. We had speculated about such a possibility a few weeks ago and
observed in a previous column that the regulator could have suspected
gas migration on the basis of the positioning of the wells drilled in
RIL’s block.
RIL
is perfectly right, albeit technically, when it asserts that it has not
violated the terms of the Production Sharing Contract (PSC). It had
submitted all the details including the coordinates of the precise
locations where it planned to drill the wells. The drilling plan was
vetted and approved by the Directorate General of Hydrocarbons under the
leadership of the Director General who at that time was V.K. Sibal.
Experts say the regulator normally approves the locations only after due
diligence, which was supposedly carried out in the case of RIL as well.
ONGC had already discovered gas in the adjacent block and
interconnectivity of the reservoir is not an unknown phenomenon in the
E&P industry. The regulator had in his possession the data regarding
the 3D surveys conducted in both the blocks. If ONGC’s charge that a
well was drilled within 50 metres distance from the boundary of the two
blocks is true, then it cannot be a case of negligence.
The
PSC is signed between the contactor and the government on behalf of the
President of India. ONGC is not a party to the PSC for KG D6 which RIL
signed with the government. Therefore, it is well within its right to
proceed against anyone who it believes sucked its gas out of the
reservoir. After consulting experts, we concluded in our previous column
that the needle of suspicion pointed towards two regulators: V.K. Sibal
and S.K. Srivastava.
If the Shah Committee upholds ONGC’s allegation that RIL deliberately
sucked its gas out of the reservoir, the question that will
automatically arise is who masterminded the operation within RIL? The
brains involved can only belong to two specific areas: Geology and
Geophysics (G&G), and Reservoir and Production Engineering.
The head of G&G in RIL at that time was none other than Padmasree
Rabi Bastia, a former ONGC hand who joined RIL after it entered the
upstream sector. The discovery of gas in KG D6, which was billed as the
world’s biggest gas discovery of 2002, elevated Bastia to the status of
Columbus who had discovered America. He seemed to be on top of the
world, lobbied and got a Padmasree which he refused to return after his
reserve estimate turned out to be a colossal blunder.
RIL’s E&P
division was headed by I.L. Budhiraja, a petroleum engineer who worked
in ONGC’s Bombay High during the Accelerated Production Plan (APP) in
the early 1980s. The wrong production practices under APP damaged the
Bombay High reservoir, resulting in high gas-oil ratio which could not
be rectified even after investing millions of dollars and drilling
innumerable wells. Budhiraja was posted in Bombay High when Col S.P.
Wahi was the CMD of ONGC. He was trained in Canada as a petroleum
engineer. Reservoir engineering is part of Petroleum engineering and,
therefore, he cannot claim to be unaware of the phenomenon of
interconnectivity of the reservoir. He shifted to GAIL and rose to
become its director. In RIL, Rabi Bastia was reporting to Budhiraja.
If
Sibal and Srivastava are in trouble, can Budhiraja and Bastia escape
the tightening noose? According to a well-known expert, the gas
‘migration’ issue would have been known to the G&G team both at DGH
and RIL. Bastia and Budhiraja were also guilty of letting down their
boss, Mukesh Ambani. They convinced him that KG D6 had gas reserves
worth of 11 trillion cubic feet (TCF). But when production collapsed
within a year, shredding Ambani’s reputation as a shrewd businessman,
these worthies were able to cover up their colossal bungling because of
the clout that RIL had over the media.
When the reserves were subsequently downgraded to below 3 TCF, any boss
would have been perfectly justified if his admiration for the duo turned
to fury.
But Ambani is known for equanimity and tends to ride his setbacks. He
was magnanimous and let them off the hook and owned up for everything.
There was only once he appeared to lose his sangfroid when he said he
had been let down by the upstream leadership. He has never made an
unpleasant observation after that. Bastia is now with another upstream
company and Budhiraja is back in Delhi.
The manner in which the Modi government announced the appointment of the
Shah Committee can give anxious moments to the people involved in the
scam. The committee has been given a specific brief and asked to come up
with its observations within a time-bound manner. Shah is known for his
integrity and competence. Who could have anticipated a change of
government at the Centre? Calculations do go wrong and, in this case,
they seem to have gone terribly wrong. For these characters, Macbeth may
sound prophetic: “Life is a tale told by an idiot…”