The Union petroleum ministry, which is going full steam ahead with policy decisions that will facilitate greater private sector investment in oil exploration, has not even initiated a Cabinet note on the discovered fields policy. The policy requires the approval of the Union cabinet, now that the Comptroller and Auditor General (CAG) has raised objections to the terms and methodology of awarding the contracts.

Meanwhile, the cabinet has approved amendments to the Oilfields Act, that will be necessary before implementing the New Exploration and Licensing Policy (NELP). The Act is expected to be amended during the current session of Parliament, so that royalty concessions may be offered to oil companies bidding for exploration blocks, offered as part of the NELP.

Thecentre plans to kick off the bidding process for some of the 47 exploration blocks being offered with NELP sops, by August.

It has also approved all the pending 18 contracts for exploration blocks awarded in keeping with the old policy.

Only five contracts are yet to be signed and even those formalities are expected to be completed by the end of the month. No similar policy initiatives are evident in finalising contracts for oilfields discovered by the national oil companies.

The discovered fields will gather dust till the centre makes up its mind on whether it will revise the existing policy or not. According to sources in political circles, the 13-party coalition prefers to hedge a decision. The discovered fields policy became controversial after the CAG decided that it had considerably favoured the private sector companies, particularly the Enron Oil and Gas India and Reliance Industries combine, in comparison to national oil company, the Oil and Natural Gas Corporation (ONGC).

The Enron Oil andReliance Industries consortium has been offered the Panna-Mukta and mid and south Tapti oilfields, discovered by the ONGC. The CAG felt that ONGC had not been adequately compensated for the cost of developing the 18 oilfields offered through global bids.

The CAG report also pointed out that royalty and tax concessions available to the private sector were not being offered to ONGC, even though it was also a partner in the oil production ventures. National oil companies are entitled to a 40 per cent stake in unincorporated joint ventures with the private sector in oil exploration or production.

The CAG report, questioning the terms and conditions of the production sharing contracts for discovered fields, was published barely two months after the first 18 contracts were signed in September, 1996. The centre then decided to re-examine the contracts.

A group of secretaries that met subsequently, concurred on continuing the existing policy of awarding discovered fields. That decision, however, has to bevetted by the cabinet, before the Union government gives away the remaining 12 oilfields discovered by national oil companies to private sector companies.

The Ratna-R series fields are the only medium-sized fields for which production sharing contracts have not yet been signed. The oilfields have been awarded to a consortium of Essar Oil India and Premier Oil Pacific of UK. The remaining contracts pending signatures are for 11 small-sized fields.

In the wake of the economic reforms of 1991, the centre had put 35 exploration blocks and 30 discovered fields on the block. Contracts for all the 35 exploration blocks will be signed within the coming fortnight and a fresh lot of 47 blocks will shortly be offered with more tempting terms attached, judging by the sequence of policy measures taken.