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Rediff.com  » Business » Oil industry body writes to PM against ADAG ad campaign

Oil industry body writes to PM against ADAG ad campaign

October 19, 2009 16:02 IST

The apex body of oil firms has petitioned Prime Minister Manmohan Singh against Anil Ambani Group's media campaign, saying it conveyed a distorted and negative view of doing business in India and sullying the industry and its achievements.

Association of Oil and Gas Operators, which was set up in 2006 and has members cutting across the E&P industry from ONGC to Reliance, on October 8 wrote to Singh taking exception to "external parties" seeking fixed returns only on investments made in producing hydrocarbons while the risk money and that spent on unsuccessful exploration was forgotten.

The industry will be affected "if such a campaign creates a wrong perception and results in further creating complicating procedures, or delaying decisions," AOGO said without naming Anil Ambani Group.

ADAG says it has an agreement with Reliance Industries to get gas at $2.34 per mmBtu, but the Mukesh Ambani firm says it can't do so as the government has approved rates for its KG-D6 gas at $4.20 per mmBtu and it will not make profits at the price committed in 2005.

Anil Ambani group firm RNRL had launched a media campaign in August, alleging that oil ministry was helping RIL wriggle out of the gas supply contract.

"The upstream segment of the hydrocarbon industry is characterised by very high risk and cannot be judged by norms of returns or margins of manufacturing sector," AOGO said.

ADAG spokesperson did not offer any comment.

"Upstream operates in a market driven by volatile price regime. In the 17 year history PSC regime in India, we have sold oil above $130 as well as below $10," AOGO added.

Price interventions by the government add additional risk factors not considered while bidding or for NELP.

"The campaign conveys a distorted and negative view of doing business in India. This will adversely affect new companies coming to India, as well indigenous companies from investing in the country," it added.

AOGO said the campaign would have negative effect on the bidding in the eighth round of New Exploration Licensing Policy which ended in a damp squibb four days after the receipt of the letter.

"We request a very quick and time-bound and decisive action protecting the image of industry, ensuring the brand India (is) not tarnished," it wrote.

The Association raised concern over tarnishing the reputation of ministry or DGH saying technical achievements were being "sullied by external parties without any basis."

"We are also affected if such campaign creates a wrong perception and results in further creating complicating procedures or delaying decisions," it said.

"We are also affected if the number of entrants into upstream does not grow at least at the rate seen in the last few years, resulting in increase of service cost," AOGO said.

The Association sought Prime Minister's interference in ensuring upstream growth by simplifying procedures, speedy decisions and honouring both contractual.

"AOGO sometimes has a divergence of views with Petroleum Ministry and (oil regulator) DGH on many policy and procedural matters.

"While we have our differences both on specific issues, as well as how to resolve the same, not once has any operator brought forward an instance or suggestion of resolving any issue by means other than professional or legal," it said.

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