Ice broken on defence clearance to RIL's KG-D6, 6 blocks: Veerappa Moily

Defence Ministry has declared 7 blocks, including RIL's KG-D6 which has been in production since September 2008 and its gas discovery block NEC-25 for reasons like overlapping with proposed Naval base or being close to missile launching and Air Force exercise area.

"We have broken the ice. I don't think you can say (log jam continues)... oil and gas activities and defence strategies can co-exist," Moily told reporters when asked about the outcome of the first meeting of the Cabinet Committee on Investment (CCI).

He said the Defence Ministry has classified seven blocks as 'no-go' areas for oil and gas exploration and has imposed stringent conditions for another 32.

The CCI in its meeting on Wednesday asked the Ministry of Defence and Moily's ministry to sort out differences over the seven blocks in one month and for the 32 areas in three months.

"I don't think there will be a problem. We will sort it out. This clearance will open up Rs 80,000 crore of investment and a big gateway of investment in the petroleum sector," he said.

Moily said oil and gas exploration and defence activities can co-exist as is the practice in several countries, including the United States.

"They (Defence Ministry) have a concern, which we are also concerned about. National security is important (but) at the same time oil and gas exploration and development is also necessary," he said. "When countries are after countries are going ahead, why can't India."

Moily said more than USD 14-15 billion investment has already been made in blocks like KG-D6 which has been producing oil since September 2008 and natural gas since April 2009.

"Enough technology is available where exploration can co-exist with defence strategies," he said, adding oil and gas production does not require thousands of kilometres of area.

While companies are allotted large areas for finding hydrocarbons, actual area used for production is only 4-5 per cent and the rest of it is relinquished, he said.

The CCI, which was constituted to expedite the clearance for infrastructure projects of Rs 1,000 crore or more, on Wednesday took up the issue of defence ministry declaring 6 blocks in KG basin including KG-D6 producing fields and one in NEC or North East Coast region (RIL's gas discovery area of NEC-25) as "No-Go" areas and putting stringent conditions on 32 other blocks.

"The issue was discussed threadbare," Moily said the CCI has asked the two ministries to sit together and resolve the issue.

Originally, the Defence Ministry had declared 14 blocks as "No-Go" areas as they over-lapped or were close to proposed Naval base or missile launching range/air force exercise area.

But the Defence Ministry later relented and agreed for exploration to be permitted in 7 blocks in Mahanadi basin. One more block which had previously objected to by the Commerce Ministry too had been cleared, bringing down the number of blocks awaiting clearances from 47 to 39.

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