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Directorate General of Hydrocarbons veers off from mandate, fails to carry out primary task

DGH, technical arm of the petroleum ministry, hasn’t been able to carry out its primary mandate in the past five years.

, ET Bureau|
Updated: Sep 02, 2014, 03.38 AM IST
NEW DELHI: The Directorate General of Hydrocarbons (DGH), technical arm of the petroleum ministry, hasn’t been able to carry out its primary mandate in the past five years.

It has failed to collect the vital geological data on prospective basins that India needs to boost oil and gas exploration. In the last financial year, it didn’t spend anything on exploration and production.

The agency doesn’t seem to have the time or the money it needs. Meanwhile, its employees are a demoralised lot, having to seek the petroleum ministry’s direction for various decisions, getting battered by audit reports and even going unpaid for months. The organisation’s resources are largely exhausted in legal battles with energy operators such as ONGC, Reliance Industries, Cairn India, BG, BP and Hardy over contractual issues, government and DGH officials said.

In FY14, DGH devoted 79.4% of its Rs 36-crore budget to secretarial expenditure and 19.5% to arbitration cases. About 0.9% of the budget was capital expenditure and only 0.2% was spent on promotion of hydrocarbon activities, sources said.

"At a high-level meeting it was revealed that DGH did not spend even a rupee on exploration and production (E&P) activities in 2013-14," a government official said. "The oil ministry has directed it to budget for E&P in the current financial year." DGH did not respond to ET’s queries.

Officials at the agency said criticism by the Comptroller & Auditor General (CAG) of India in its reports, which they said was undeserved, and over-dependence on the oil ministry have demotivated the directorate.

"DGH office is far away from the city and we have to frequent oil ministry for its directions, which consumes half of our time and energy. Besides, there are instances that we did not get our salaries for months and at times we had to fight for our bonuses," a DGH official said.

Two members of Association of Oil and Gas Operators said DGH should be made a multi-member agency and its head should have the rank of secretary. "DGH is an important institution, and a strong DGH is vital for the growth of oil and gas sector," said RS Sharma, Ficci’s hydrocarbons committee head and former ONGC chairman.

The industry expressed surprise at the directorate’s inability to collect geological data, something that has been on hold since 2009 because of policy issues. Availability of high-quality geological data would automatically attract investments from international oil and gas giants, the source said.

India has 3.14 million square kilometres of sedimentary basins, but most of these are unexplored for want of geological data. The Kelkar Committee, which is preparing a long-term road map on energy security, said due to "paucity of adequate data" investors do not have clear view of the country’s prospectivity.

It suggested that DGH should concentrate on technical aspects of exploration and production of hydrocarbons, while the revenue department should oversee fiscal aspects of production sharing contracts.

ADGH official said India has been trying to get companies to help collect geological data. "The government recently framed an investor-friendly policy to engage global energy firms in collecting geo-scientific data that would help in expeditious exploration of country’s sedimentary basins," this person said.

"It will become the cornerstone of our future open acreage licensing policy (OALP), which will allow energy firms to bid for blocks anytime of the year." Currently, India auctions select blocks under the new exploration licensing policy.

India needs to generate such data without looking to see whether such efforts will be profitable, according to a government official.

"Globally, experts are not interested in acquiring data on a profit-sharing basis," the person said. "The Planning Commission had also pointed out in February last year that the government should not focus on making profits from speculative surveys."

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