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Corporate wars are common in India’s oil sector. But it all started with govt, ONGC, OIL

In ‘Unfilled Barrels’, journalist Richa Mishra recounts India's upstream journey in the oil sector from KD Malaviya to ONGC.

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As far as the oil and gas sector (particularly the upstream sector in India) is concerned, the genesis of the conflicts was when the GoI decided to offer ONGC and OIL the discovered fields (PMT, Ravva and the like). ONGC had complained all along that certain fields it found (Panna-Mukta and Ravva fields were partially developed and had started production) were snatched away by the government without adequate compensation. Subsequently, there was an adverse CAG report in 1995–1996, followed by complaints (widely believed to have been triggered by a company which lost out in competitive bidding), recounted an officer. The officer added that this led to an enquiry by the Central Bureau of Investigation (CBI), and PIL was filed in the Delhi High Court to challenge the award of the Panna-Mukta fields. The Delhi High Court judgement was challenged in the Supreme Court. This was perceived to be part of corporate rivalry.

Later, the award of the Ratna R-series fields (a producing field of ONGC) became controversial. I was told this was instigated by some competing corporates, which was fought by the awardee Essar. Eventually, after a lapse of almost two decades (the Ratna field contract was awarded in 1996), the field was returned to ONGC!

Then, the dispute between the famous Ambani siblings—RIL and RNRL—divided government functionaries into two camps (this can easily be substantiated from government records). The government then became an intervener in the courts. Some people in the industry and the government believed that the domestic gas sector and its pricing was politicised as a result.

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When the Cairn India IPO was about to be launched, there was a sense of corporate war in the air. Again, everyone knew, but no one would talk about it. During the last leg of the IPO process, there was a sudden spread of negative news about Cairn. The rumour within the company was that a big rival company was behind the news. What was more worrying for Cairn was that some investors who had initially agreed to be partners seemed to have backed out.

The last week of the process was tense, and Rahul Dhir, who headed Cairn India then, really had to step up to make last-minute calls to make sure that the IPO was a success. At that time, it was thought that somebody very powerful was behind it. However, no names were taken in public.

The promoter, Cairn Energy PLC, did not take any measures to counter the controversies. They took it in their stride and did not behave like a rival Indian company and lodge complaints. They decided to see the negative news as a rumour and just focus on what needed to be done at that time because they had to ease the worry of international investors. Both Rahul and PLC had exposure to that world. The first real hint of what you could call a corporate war, or corporate rivalry, was evident during the last leg of the IPO process, recounted a former member of Cairn’s top team.

The last day of the IPO closing was also challenging. ‘Our PR agency too felt a powerful hand behind all this. As far as the media is concerned, they helped us to reach out to senior editors across different publications. Rahul personally met a few people in the media to explain the facts,’ the executive shared.

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Executing the pipeline projects was a different experience. There were two things. The pipeline was 650 km in range and involved some 45,000 landowners.

The entire stretch was handled extremely well. Dealing with so many landowners was a separate lesson for the company and required a good amount of engagementby the team. ‘But when it came to Gujarat, we needed to take the end section of the pipeline to Bhoghat, the terminal. We always thought laying a pipeline in Gujarat will be easy as it is a very investor-friendly state, recounted the official. Corporate rivalry at the local level, however, instigated trouble for Cairn in Gujarat.

Interestingly, in this sector, everyone knows everything but pretends not to know anything about corporate supremacy. Whenever a new player— however mighty—entered the industry, the rumour was that one particular corporate house created hurdles. At one time, key corporate houses in the sector were all fighting it out. The situation was bound to have implications on the officials in the ministry.

The Impact on Government Officials and Journalists

In the corporate war scenario, the officers concerned are anxious about making decisions as some may be victimised or targeted in a witch-hunt. Then for creating a normal, officers develop a tendency to keep balance, delaying decision-making or avoiding any decisions. Many complaints (including personal attacks) from unknown and known sources (including MPs) create anxiety. This is part and parcel of working in the government, and one has to develop the skills to handle such situations. However, the decision-making process is impacted. I asked another official whether there were outside influences in decision-making. ‘I guess sometimes pressure was exerted as part of lobbying,’ the official said.

Incidentally, anonymous attacks are not just restricted to officials. Journalists, too, are targets. How can one forget the oh-so-famous Radia tapes!

There have been instances when there is a clear divide on whether the beat report belongs to corporate group A or B. Journalists who belong to neither have faced anonymous attacks. I remember a particular incident when an email was circulated against me. Some sympathetic colleagues called and said they knew the source. All I did was keep my colleague Raghuvir (the current editor of BusinessLine) informed. I wrote back, stating that we can easily track who is generating these emails, and believe me, there were no more such emails from then onwards. By then, I realised that if I had to succeed in this beat, I had to be aggressive and give as good as I get. Those trying to defame others don’t understand the language of silence. The email could not create a controversy and died a natural death. I was not the only one targeted. There were other such incidents too.

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How is corporate rivalry in the oil and gas sector different from sectors like telecom?

Unlike other industries, in the upstream oil and gas sector, you don’t really compete for a market share with others. The sector is like a game of golf that you play to your potential, explained an industry veteran. You learn from every successful or failed well; it doesn’t matter which company drilled it. Fortunately, the process to award oil and gas blocks has been very fair, objective and transparent since the days of NELP, and no loser has ever complained. The MoPNG should be proud of this bidding system, as global awards of oil and gas blocks have always been controversial. In India, too, the award of coal blocks and telecom licenses has seen multiple controversies.

Shell operated in India, but there was no significant independent oil and gas player in the upstream private sector until Cairn Energy arrived. Cairn achieved phenomenal growth even before the Mangala discovery and its listing in the Indian stock exchanges.

The downstream sector had two strong privatesector players, RIL and Essar. Till then, the concept or power of backward integration was not appreciated, and the government had not paid much attention to the upstream sector, which ONGC and OIL dominated.

Reliance entered the upstream sector a little late but entered in a big way by successfully bidding for deepwater blocks. Their entry certainly changed the equations in the sector and the rules of the games forever. Reliance is still an aggressive player.

In the 2000s, walking through the second floor corridors of Shastri Bhavan, which houses the MoPNG, was a different story altogether. The set-up has become more sanitised.

This excerpt from ‘Unfilled Barrels: India’s Oil Story’ by Richa Mishra has been published with permission from Bloomsbury Publishing India.

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