All that you need to know about the Neduvasal Hydrocarbon project

Despite accessing multiple Government documents, there remain gaps in the Centre's narrative
All that you need to know about the Neduvasal Hydrocarbon project
All that you need to know about the Neduvasal Hydrocarbon project

The Centre's nod to the hydrocarbon extraction programme in Neduvasal in Tamil Nadu has led to massive protests. Drought hit farmers, college students and even scientists have taken to the roads of this town in the Cauvery basin, to express their displeasure over the project. The agitators, all alleging that if the project were to take off, it could lead to an ecological disaster in the area.

The reasons for protest offered by geologists, experts and residents of Neduvasal vary from - displacement of farmers and occupation of cultivable land to saline water intrusion in the ground water system.

A press release from the Government of India however, dismissed these concerns and claimed that the project will not have any environmental impact.

What is this Hydrocarbon Project?

The hydrocarbon project is overseen by the Directorate General of Hydrocarbons and in 2015, the Government of India started the ‘Discovered Small field’ policy. In May 2016, the bidding process was started for hydrocarbon blocks across the country.  

According to the new policy, the government would earn both revenue and royalty in terms of pre-decided percentages.

This new Hydrocarbon Exploration and Licensing Policy (HELP) replaced the previous licensing format (NELP) which was already in place for 18 years. The New Exploration Licensing policy(NELP) had issued separate licenses to different types of hydrocarbons, whereas HELP covered all hydrocarbons such as oil, gas, coal bed methane, etc.

Following the launch of the bidding system however, no global or Indian gas giant submitted offers for India's tender to develop small fields. From the total of 134 e-bids which were received for 34 contract areas, 22 companies were shortlisted. 31 contract areas were finalised upon for the project by December 2016. Neduvasal in TN and Karaikal in Puducherry were two sites among the 31 in the final list.

What about the contract for Neduvasal?

The project in Neduvasal (10.0 Sqkm) was awarded to GEM laboratories Private Limited, a company based out of Davangere in Karnataka, started by late BJP Member of Parliament, G Mallikarjunappa.

A Public-Sector Unit Company Bharat Petroresources Limited was to conduct operations in Karaikal. 

The two contract areas have an in-place volume of 4,30,000 metric tonne of oil and oil equivalent gas.

There is no clarity on where exactly the 10 sq km land allocated for the project is located. The Petroleum Ministry website simply says ONDSF/Neduvasal

Is this a Methane exploration project?

In 2015, the TN government resolved to stop all methane projects granted to companies in the Cauvery Delta region. But suspicion is rife amongst the residents of Neduvasal that there will be methane extraction.

In an exclusive interview to The New Minute, GEM Laboratories clarified that the project in Neduvasal was only aimed at extracting crude petroleum oil. 

“This is a project to extract crude petroleum oil. First, we will inspect the well in which ONGC had done an exploratory drill. After we clean up that well, we will study if further exploration can be done there. Meanwhile, our team will study if there are more places to explore in the 10 sq km area allotted to us,” said Hari Prasad, a director at Gem Laboratories Pvt Ltd.

A source in ONGC that there was no shale exploration involved.

What technology will be used?

TNM spoke to Gem Labs, the DG Hydrocarbons and ONGC. All three maintained that the technology to extract had not been decided yet. When asked repeatedly about the technology and whether gas injections would be used, all three maintained that it was undecided. There is a lot of concern in Tamil Nadu surrounding the secrecy.

What are the objections raised by villagers?

Villagers are saying that agriculture will be heavily impacted if extraction begins. They are also apprehensive that fertility of the land will be affected and groundwater will be contaminated.

There is also fear that there could be saline water intrusion if the sea water and ground water interface is disturbed.

Moreover, no agricultural activity can happen while the exploration is on and villages in and around Neduvasal are completely dependent on agriculture.

What is the Government’s objective?

The primary objective is to reduce India’s import of oil and petroleum by 10% by 2022.

The Government of India is anticipating that the cumulative peak production would be around 15,000 Barrels of oil per day and 2 Million Metric Standard Cubic Meter per Day (MMSCMD) of gas from all awarded fields.

It is further estimated that the indicative gross revenue over economic life would be approximately Rs.46,400 crores of which royalty collection for state government is expected to be Rs.5000 crore. In addition to this, the Government's revenue share is approximated to be Rs. 9,300 crore.

The Neduvasal and Kariakal projects are expected to generate gross revenue of Rs 300 crore, and state government will get Rs 40 crore as royalty.

Also read: 

How a small village in Tamil Nadu could derail PM Modi's grand hydrocarbons project


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