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Press Release [FREE Access]
Petro Intelligence » Drilling At KG-D6: The Boundaries Of Legitimacy

By R. Sasankan

Mukesh AmbaniMore facts have started tumbling out in the gas migration row that has engulfed Reliance Industries Ltd and state-owned Oil and Natural Gas Corporation (ONGC).

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.

V.K. SibalRIL 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.

S.K. SrivastavaThe 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&I.L. BudhirajaP 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.

Rabi BasitaIf 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…”



To download the latest issue 'Volume 30 Issue 24 - March 25, 2024', click here
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