by R. Sasankan

We have often set the dovecotes aflutter with our hard-hitting columns on controversial subjects. We seemed to have done it again last week with our article titled Gas Migration Case: Regulators In The Dock which drew a lot of plaudits. But what we were surprised by was the response from one avid reader whose message seemed to impute that I had been strangely silent when it came to exposing the real colluders in the gas migration saga. Astonishingly, this comment emanated from a former senior executive of the Oil and Natural Gas Corporation (ONGC). I quickly protested that my column had not even accused the regulators of collusion and the reason why we had decided to be a little circumspect was the fact that we did not possess any direct evidence against them. I was merely speculating on what the AP Shah committee would say in its eagerly-awaited report on a such a burning issue. (The Committee’s report is expected by the month-end).

My contention was that if the charge of collusion against the regulators proved to be baseless, the ONGC management could come in for some roasting. But if it was proven that the charge was valid, then the regulators would have to face the music. My ONGC friend did not have any problem with that. His question was simple: Could the previous managements of ONGC duck the charge of collusion? He cited the sequence of developments in my column to hammer this point home. I argued that no one within or outside ONGC had so far levelled such a charge against the previous ONGC leadership. I could not be expected to make one as I am neither a technical expert nor have access to the papers, if any, regarding interactions within ONGC on the subject.

But as a professional journalist commenting on developments in the petroleum industry for many years, I decided to examine the merits of his contention. I decided to bounce some questions off a cross-section of geologists and senior executives, past and present, in the oil industry. The outcome of that enquiry forms the basis for this column. In my previous column, I had written that Reliance Industries Ltd (RIL), the operator of the adjacent block KG D6, had sought and secured permission to carry out a 3D survey in ONGC’s block after completing a similar survey in its own block. My understanding is that such permission is a courtesy that is not unusual in the industry. In such cases, the result of the survey is invariably shared with the parties concerned.

The question here is whether RIL shared the survey results with ONGC or whether ONGC ever made such a demand, either directly or through the regulator. “Once a 3D survey was conducted, the results should have been made available to all concerned. The Regulator cannot just look the other way. And ONGC should have had the sense to demand the results of the RIL findings,” said an acknowledged expert. There is nothing on record to show that ONGC ever made such a demand. Industry veterans contend that RIL is not an ordinary company. Its management has the sharpest reflexes among all corporates in the country and, arguably, in the world as well. Such a company would definitely be loth to help ONGC by investing a lot of money on the 3D survey. It could be true that the 3D survey was not carried out with the intention to “suck out” ONGC’s gas either. But the fact that RIL made such a request could have alerted any corporate management. That simply did not happen in the case of ONGC for some strange reason. I do not subscribe to the view that the ONGC leadership had dull reflexes. Most of the officials I have interacted with over the years have been simply brilliant by any yardstick. But the moot question whether their sharpness had been dulled by the political leadership which did not grant them the freedom to display their professional competence.

As in other PSUs, ONGC has had its share of wheeler dealers in its top management over the years, but their number was not disproportionately high. I do not think that either R.S. Sharma or Sudhir Vasudeva, the previous CMDs of ONGC, would have colluded in the despicable act of ‘gas migration’. Most of the geologists ONGC had over the years were on par with the best in the industry. Both Sharma and Vasudeva were respected for their leadership qualities. Murli Deora was the petroleum minister during the gas migration days. And let us not forget that R.S. Sharma’s appointment was mired in controversy. The file recommending Sharma for the post of CMD was returned to the ministry without the Prime Minister’s approval. There was an attempt to foist Najeeb Jung as the CMD of ONGC. Sharma went on record stating that he would not appear for an interview again. Najeeb Jung was then an RIL employee, a fact that many in the industry did not know. Neither did the Public Enterprises Selection Board (PESB). Jung was perceived to enjoy the total backing of RIL. Surprisingly, a news report from PTI divulged the fact that Jung was an RIL employee, which wrecked his chances of becoming the CMD when the PESB decided to hold fresh interviews for the position. PESB chairman N.K. Sinha was furious. How could a rival company’s employee become the ONGC’s CMD, he is believed to have wondered.

Sinha sent a message to Sharma, asking him to appear for the interview and picked him again. Still, petroleum minister Murli Deora could have rejected the recommendation, but he was intelligent enough not to exercise that option. Sharma finally made it to the top slot in ONGC. Sharma, exhausted by then, could not afford to do anything that would annoy the minister. Being a finance man, Sharma would not have known much about the interconnectivity of reservoirs. It was for the geologists or reservoir engineers to bring it to his notice. Sharma had under his leadership a director (exploration) who was physically fit and functioning. But there is nothing on record to show that he ever brought this to Sharma’s notice.

Sharma was succeeded by Sudhir Vasudeva, a production expert who was well versed in the subject of interconnectivity of reservoirs. Vasudeva also went through a hellish period before being appointed as CMD as his rival in the race made things excruciatingly painful for him. He would not have made it to the top without the help of Murli Deora. Taking up a contentious issue like gas migration would have been extremely difficult for him under the set-up that existed then. There is no evidence to show that this was ever brought to his notice either. It is here that present chairman D.K. Sarraf comes in. By filing a case against RIL on the charge of sucking out gas from ONGC’s block and dragging even the ministry of petroleum and natural gas to court for its inaction, Sarraf has gone down in India’s public sector history as the boldest chief executive it has ever had. But a question remains: while accusing RIL of draining out ONGC’s gas and the regulators for colluding in the despicable act, did Sarraf overlook the lapses of his former colleagues? If he did so, did it rob some of the sheen off his stature? Here again, there is no direct evidence. Sarraf is an Indian and an attachment to former colleagues is a common Indian failing. (Former PM V.P. Singh pardoned his former cabinet colleague Narasimha Rao for his role in the St. Kitt’s forgery case).

But some questions still remain: Who prevented the ONGC management from demanding the results of the 3D survey that RIL had carried out in the former’s block? Why didn’t ONGC order a 3D survey immediately after granting permission to RIL to do so? When did it order the Survey finally and why was it sitting on the results of its survey until Sarraf came into the picture? True, Sarraf took the gas migration issue to the court and levelled the charge of gas theft against RIL and collusion against the regulators on the strength of evidence obtained after drilling a well in the ONGC area under the guidance of international consultant D&M. But even without drilling a well, the existence of interconnectivity of reservoir can be observed through a 3D survey. This is precisely what the Canadian company Niko Resources, the 10 per cent partner in RIL’s block, did. It conducted the survey with the help of D &M even before it formally invested in KG-D6 and told the Canadian authorities about it in its periodic mandatory disclosures made a few years ago. How come that ONGC geologists could not do so with its 3D survey? This is what stoked my ONGC friend’s suspicion of collusion which rests on two grounds: that ONGC did not ask RIL for the 3D survey results and the fact that it did not promptly order a 3D survey. There is certainly substantial merit in his contention. Still, it looks difficult for me to impute that some key people in the ONGC management were in cahoots with those who had decided to suck out gas from the neighbouring field. A journalist needs solid evidence and ONGC hasn’t given me any. At best, one may say that there was some laxity. When I told an expert about my conclusion, he drily said: “Such laxity without cause is inexplicable.”