The Real Facts about Oil Field Bidding in Assam

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“Partial knowledge takes things to be simpler than they are, and so makes it’s theory more popular and convincing.” This quote by German philosopher Friedrich Nietzsche seems very applicable to the present scenario of Assam with regards to the auctioning of 12 small oil fields to private bidders. Amidst widespread speculation and rumors it has become very difficult for common citizens of the state to realize the mechanism of how the bidding of these oilfields would affect them. Most of the information regarding this issue has been presented to the people through the voices of local leaders who themselves are not sure about the factors involved.

The Minister of State for Petroleum and Natural Gas (Independent Charge), Shri Dharmendra Pradhan releasing a publication, at the launch of the Discovered Small Field Bid Round- 2016, in New Delhi on May 25, 2016. 	The Secretary, Ministry of Petroleum and Natural Gas, Shri K.D. Tripathi and other dignitaries are also seen.

To understand this bidding process and what it entails, we need to understand the working of the petroleum industry in India. The entire petroleum industry can be divided into two sectors according to their areas of functioning, viz upstream and downstream sectors. The upstream sector deals with the initial stages of exploration and production of crude oil and natural gas. Right from the geological survey of oil fields to the production of crude, all tasks fall under the operation of upstream industries. India has only two centrally owned upstream companies; Oil India Limited (OIL) and Oil and Natural Gas Corporation Limited (ONGC). The only state government owned upstream company in India is Gujarat State Petroleum Corporation Limited (GSPC). On the other hand, the downstream sector deals with the refining of the produced hydrocarbons into various fractions or final products like petrol, diesel, wax, naptha etc. and ultimate sale of these products to the customer. India has numerous government companies working in the downstream sector like Indian Oil Company Limited (IOCL), Hindustan Petroleum Corporation Limited (HPCL), Numaligarh Refinery Limited (NRL) etc. Only upstream exploration and production companies take part in the bidding process for oil fields since they are the ones responsible for production of the hydrocarbons from the ground.

The Govt. of India has been organising the New Exploration Licensing Policy (NELP) bidding process since 1999. Under the NELP, different oil blocks of the country are opened for global bidding to willing Public and Private exploration and production companies. The major private players working in India are Essar Oil, Reliance Industries and Cairn India to name a few. These companies have their operations in most of the hydrocarbon basins in India other than the Assam-Arakan basin.

Coming back to the present issue in our state, the central government has announced the bidding of marginal oil fields in three basins of India; Cambay, Krishna-Godavari and Assam-Arakan. Marginal oil field refers to old fields which have remained unexplored due to comparatively low reserves or technology to ensure economic feasibility from their production. 12 of these oil fields, located in Assam are ONGC rejected fields which could not be produced by the state company due to technical handicaps. The government’s decision was taken so as to facilitate the possible option of earning some revenue from an otherwise completely wasted chunk of natural resource. Think of it as having a plot of land and leasing it out for cultivation by a farmer because you don’t have the skills to farm the land yourself. Many political and student organisations as well as the opposition have voiced their anger and resentment at this some going to the lengths of calling for state wide strikes and bandhs. These actions on the part of leaders who frame the public opinion of the simple citizens of Assam can only be termed as foolhardy and irresponsible.

KMSS_members_protest_outside_hotel_Radisson_Blue_against_the_bidding_of_12_oilfields_of_Assam

These leaders do not seem to understand the implications of this bidding process but have somehow managed to create a huge hue and cry over this. They have questioned how the age old OIL and ONGC are incapable of producing the concerned oil fields. The fact is that it is how it is. The private companies indeed have better technologies involved in Enhanced as well as Improved Oil Recovery than the state owned companies in this regard and specialise in producing from small marginal oil fields. Another point of concern for the leaders is that if OIL and ONGC can’t work it out, why can’t other state owned companies like IOCL or HPCL take charge instead. The answer to this question is simply that these are downstream companies who do not partake in any upstream activities at all. A few people have also said that the fields could be handed over to the Assam Hydrocarbon and Energy Company Limited (AHECL). The truth is that since it’s inception in 2006, the AHECL has not made any notable progress to place it in the oil map of India. It has no oilfields and even it’s website appears to be dead and unattended. In such situations, the idea of AHECL exploring fields rejected by ONGC for unfeasibility seems to be ridiculous.

It is of major concern that these organisations, in their protest, seem to include the consent of the Assamese population in general to support their stand as is evident in a KMSS protest banner that says “People of Assam won’t allow the sale of oil to private companies.” These ignorant and baseless protests continue to project Assam in a bad light outside the state. Also, the way these leaders influence the uneducated and poor population of the state to follow them in these protests fueled by misinformation and partial knowledge is condemnable and shame worthy. It is common knowledge that in previous times, private companies have found it unfeasible to work in our state owing to the practice of such organisations involving demands of money in exchange for allowing them to carry out their operations safely. These kind of activities that amount to racketeering has retarded the state’s development process.

It needs to be taken into consideration that the involvement of these private companies in the exploration of hydrocarbons in Assam would invariably create job opportunities in the state. The exploration companies work hand in hand with the local service providers to undertake various operations like drilling, mud logging, well deviation, logistics etc. These service providers, especially the ones in the drilling sector, employ local youth in their operations. A few of these are JayBee Energy, Simplex Infrastructure, North East Drilling etc. The Dibrugarh University Institute of Engineering and Technology is the only institute in the north east offering an engineering degree in Petroleum Engineering. Owing to the global oil crisis, the employment opportunities for petroleum engineers are very few and limited. This bidding process would be a welcome decision for the petroleum engineering graduates who are currently unemployed.

It is time that we, the people of Assam, stop following leaders blindly, leave the dimly lit road of partial knowledge and introspect to make wiser decisions.

2 Comments

  1. Durlov Baruah
    • Indraneel Agasty

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