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

Neduvasal is one of 31 areas identified across India as part of Modi’s Discovered Small Fields policy
How a small village in Tamil Nadu could derail PM Modi's grand hydrocarbons project
How a small village in Tamil Nadu could derail PM Modi's grand hydrocarbons project
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It is one of Narendra Modi’s pet projects, born out of the grand ambition to make India self-sufficient in energy. While the renewables juggernaut moved slow, PM Modi saw an opportunity in tapping smaller oil and gas fields to reduce the country’s import dependency. But Modi’s grand plan is now under a cloud, thanks to just one of the 31 fields identified across India – the one in Neduvasal in Tamil Nadu. 

Protests have been raging in Tamil Nadu’s Pudukkottai district for several days now over the hydrocarbon project in Neduvasal village. On February 15, the Cabinet Committee on Economic Affairs chaired by PM Modi gave its approval for all the hydrocarbon projects as a part of the Centre’s 2015 Discovered Small Fields policy. Soon enough, there were protests on the ground in Tamil Nadu.

Much like the jallikattu protests, the demonstration against the hydrocarbon field has intensified following the support of celebrities and social media users. Protesters cry foul citing environmental consequences and the loss of agricultural land.

What is the Discovered Small Fields policy?

It is one of Prime Minister Narendra Modi’s flagship energy policies and a part of the ‘Make in India’ initiative, aimed at securing the country’s energy needs. With India importing 80% of its crude oil, Modi launched the Discovered Small Fields (DSF) policy on May 25, 2016 with the aim of reducing the country’s dependence on oil imports by 10% by 2022.

Speaking at the launch of the policy in 2016, Petroleum Minister Dharmendra Pradhan said, “It is well recognized that despite liberalizing its Exploration and Petroleum sector almost two decades ago, India has not completely unlocked its hydrocarbon potential. This is evident from the fact that out of the total oil and gas consumption of 226.3 Million Metric Tonnes, only 70.4 Million Metric Tonnes is produced domestically.”   

Pradhan noted that the reason India’s domestic oil and gas production remained weak was on account of “obstacles” created by the government in the past and the Directorate General of Hydrocarbons (DGH), the regulatory body. Oil and gas reserves worth Rs 70,000 cr continued to remain locked owing to past policies.

“We realised that a course correction is the need of the hour to boost the sagging domestic oil and gas production. We are also convinced that a simplified and transparent administrative and regulatory setup has a huge role in fast-tracking developmental activities in hydrocarbon sector,” the Petroleum Minister explained.

Bidding of hydrocarbon fields

 Offering “improved fiscal terms” which includes revenue sharing model, unified licensing policy and other incentives, the Petroleum Minister launched the auction of 67 hydrocarbon fields that had been discovered by ONGC and OIL years ago, but that had not been developed.

A press release issued by DGH on February 15, 2017 states that the DSF auction received 134 bids for 34 contract areas. Following an evaluation, 22 companies were shortlisted for 31 contract areas.

 Significantly, the country’s major oil producers including ONGC, which had discovered a majority of the fields chose to sit out of the bidding process, making way for new players.

“The government has given out small fields measuring up to 10 square metres that are not viable for big oil companies,” said a source at ONGC to TNM.   

 Out of the 22 companies shortlisted, 15 were new entrants to the Exploration and Petroleum sector.

“These blocks being small and discovery of hydrocarbon having been made are relatively less risky, offering a great opportunity to new entrants in the upstream hydrocarbon sector, hitherto being seen as preserve of only large players,” said a press note by DGH. 


Notably, out of the 31 hydrocarbon areas, 9 fields are located in Assam, 6 in Mumbai offshore, 5 in Gujarat, 4 in Andhra Pradesh, while there was only one in Tamil Nadu’s Neduvasal and one in Puducherry’s Karaikal. Yet resistance to Modi’s pet initiative has come from Neduvasal and Karaikal.

 Last week, Puducherry Chief Minister V Narayanaswamy said the Union Territory would oppose the project, stating that the Centre had sanctioned the project without obtaining permission from the territorial administration.

In Neduvasal, however, farmers were first to voice their opposition stating that the project would have an adverse impact on agriculture besides depleting and contaminating groundwater in the area. While opposition parties including the DMK, CPI and the PMK were quick to lend support to the demonstrations, students and actors have also joined the stir against the hydrocarbon exploration field.

The real threat for the government, however, is that protests could now prop up in other parts of the country too where the project has been commissioned.

The Cauvery Delta witnessed similar protests in 2013 over the Coal Bed Methane exploration project, which aimed at extracting methane gas using hydraulic fracturing. Three years later, in November 2016, the Centre announced that it was forced to cancel CBM exploration in Tamil Nadu owing to the agitation by the farming community. 

Will Neduvasal protests force the government to rethink its pet project?

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