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Monday, December 10, 2018
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Out of depth
Oil and gas exploration, especially in deepwater, is a risky business that requires highly sophisticated technology which, in turn, requires huge funding. Those hoping to strike riches without equipping themselves with the appropriate technology and adequate expertise will almost certainly come to grief, as the Gujarat State Petroleum Corporation (GSPC) has. The state-owned company has spent over Rs.17,000 crore of public money over the last five years in the Krishna-Godavari Basin with nothing to show for it in terms of either oil or gas output. A report of the Comptroller and Auditor-General of India (CAG) points out — and quite rightly — that the project was badly planned, thereby leading to both cost and time overruns. In 2005, Gujarat Chief Minister Narendra Modi had proudly declared that the block had reserves of a massive 20 trillion cubic feet (tcf) of gas, even more than that of neighbouring Reliance Industries (which was estimated at 14 tcf). The buzz around the Gujarat ‘find’ was heightened with Mr. Modi naming the block Deendayal after Pandit Deendayal Upadhyaya. We know now that both the GSPC’s and Reliance’s reserves were overestimates, and that too by a long chalk. From an estimated output of 80 million standard cubic metres of gas a day at its peak, Reliance’s production is now in the low single digits. As for GSPC, the upstream regulator, the Directorate General of Hydrocarbons (DGH), marked down the reserves to a piffling 1.8 tcf after scrutinising field data.
Even the biggest and best oil companies make miscalculations while exploring frontier basins; such failures go with the territory — they occur despite the deployment of the latest technologies, often because oil and gas reservoirs are formed in complex depositional environments. The GSPC’s big mistake was not overestimation, but the somewhat unrealistic assumption that it could develop the highly complex deepwater field on its own. At a time when even ONGC with decades of experience was circumspect about how to go about developing its block in the KG Basin, GSPC with no comparable track record plunged headlong. The kind explanation for this approach is that it was a bad miscalculation. The unsparing one is that it was sheer hubris. Given the difficult nature of the high-temperature and high-pressure KG Basin field, GSPC should have roped in a technology partner, as Reliance did with BP. The company could have even considered collaborating with other PSUs such as ONGC or Oil India. GSPC is probably also guilty of not correcting the course after seeing that Reliance ran into technical problems in the same deepwater field despite accessing cutting-edge technology and global expertise. The urge to strike out independently despite a clear lack of technical expertise in a business fraught with risks has proved costly indeed for the company — and for the taxpayer.
The need to pre-empt nuclear terrorism
The world’s major nations seeking to develop nuclear power, with one notable exception, gathered in Washington last week for the Barack Obama administration-led Nuclear Security Summit (NSS), a platform to discuss strategies to block terror groups such as the Islamic State from obtaining radioactive material and setting off a “dirty bomb”, or worse. The absentee from the high table was Vladimir Putin, the President of Russia, which houses the largest number of nuclear weapons — some 7,300 warheads, compared to the U.S.’s 6,970 and India’s 120. Russia’s absence, apparently owing to Mr. Putin’s diplomatic stand-off with Mr. Obama over the crisis in Syria and Iraq, to an extent doomed the fourth and final NSS to piecemeal rather than dramatic goals. Nevertheless, the Summit saw the 50-odd participant-nations celebrate the creation of a strong legacy in detecting, intercepting and securing vulnerable and illicitly trafficked nuclear materials, including pre-emptively safeguarding stockpiles of highly enriched uranium (HEU). Mr. Obama has doggedly pursued the vision of a de-nuclearised world that he outlined in his 2009 Prague speech. Following this vision, at least 2,965 kg of civilian HEU, the equivalent of 100 or more bombs, has been moved to safeguarded sites in the six years since the NSS began. Even if this only constitutes 2 to 3 per cent of total supplies, with nearly 98 per cent remaining in opaque military stockpiles, it is a good start.
India’s achievements in the realm of improving nuclear security have been considerable during this time, including in establishing a rigorous legislative framework for developing nuclear resources and a Global Centre for Nuclear Energy Partnership, the contribution of $2 million towards the Nuclear Security Fund, and participation in UN and IAEA joint mechanisms to strengthen nuclear security. However, along with Russia, China and Pakistan, India has been frustrating the West as a hold-out that refuses to sign a 2014 Nuclear Security Implementation initiative. The pact was joined by more than two-thirds of the participating states and is arguably the most significant instrument to build a robust nuclear security system based on national commitments to the application of international principles and guidelines, including peer reviews. In closed-door meetings, New Delhi may also have been questioned on disquieting signals suggesting that its nuclear materials may be less than secure. A March 2016 Harvard University study cautioned that after inspecting nuclear reactors, American officials had ranked Indian nuclear security measures as “weaker than those of Pakistan and Russia”. Worldwide, the alarms for nuclear terrorism are likely to be blinking red: a case in point is the discovery by the Belgian police that IS conducted surveillance of the home of an officer at a Belgian nuclear site that held large stocks of HEU. India cannot be complacent over securing vulnerable nuclear material, and the first step has to be a willingness to speak openly about the risks of terrorism and sabotage posed by its clandestine nuclear weapons development sites, and not just on its safeguarded civilian nuclear energy programme.
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