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Vedanta’s Thirst and Modi’s HELP

Neelambaran A |
The allocation of blocks for extraction of all forms of hydrocarbon to private companies without any experience in the oil and gas arena came as a shock to the experts of the industry. Environmentalists accuse the government of being desperate to reduce the import dependency on oil and gas compromising on the adverse environmental impact.
Vedanta’s Thirst

Illustration: Kathir

The Narendra Modi-led Bharatiya Janata Party (BJP) government is known for its unrelenting support to the corporate companies. Their policies have ensured windfall profits for the corporates; in this case, it’s the Vedanta Group at the cost of the Public Sector Undertakings (PSUs). One such policy is the Hydrocarbon Exploration Licensing Policy (HELP) approved by the union government on March 10, 2016.

Free hand to Corporates: Uniform Licensing Policy

The HELP is framed in such a way that the corporates are free to explore and extract all forms of hydrocarbon with a single licence. More importantly and shockingly, the private firms without any experience in oil exploration were also invited to bid and subsequently, Vedanta Group was allocated blocks in the delta districts of Tamil Nadu. The earlier approval process as per the New Exploration and Licensing Policy (NELP) required separate licences for exploration of different forms of hydrocarbon, thus preventing the companies from exploitation of resources. The Vedanta Group is set to be the single biggest beneficiary of ‘HELP’.

The central government states the financial limitations to carry out big projects as the reason for involving private companies in the oil and gas production. However, it finds ample amount of money to build statues and spend on advertisements. This exposes the priority of the BJP-led government.

Conventional and Unconventional Exploration

Generally, crude oil and natural gas are extracted through conventional methods by drilling up to a depth of up to 6,000 feet. The adverse impact on the environment due to the discharge of the water following the extraction can be limited if the drilling process is done as per the norms laid out. But unfortunately, even the state-run Oil and Natural Gas Corporation (ONGC) has been accused of violating the rules resulting in continuous leakages and bursts in pipelines in the delta districts.

Sethu Raman, an activist with the Tamil Nadu Science Forum (TNSF), told NewsClick, “The past several years, the delta districts are witnessing several protests against the conventional hydrocarbon extraction projects. Now the government has sanctioned permission for the exploration through unconventional process which involves the extraction of shale gas and oil, tight gas and oil and gas hydrates. The delta region is depending more on agriculture and not on such industries. Earlier in 2010, the Coal Bed Methane (CBM) project was implemented and the people got naturally agitated and afraid of the impact. Even the public hearing was not conducted by the ONGC and no separate Environmental Assessment Report was obtained for such unconventional process”.

Also, the processing of water produced as a result of the exploration and refining process does not seem to be followed by the ONGC, resulting in damaging the fertility of the soil. The unprocessed water is toxic and continues to damage crops and water bodies as well.

Experts in the field of oil and gas exploration strongly believe that the conventional hydrocarbon exploration can be done without causing any type of pollution. They advocate the extraction of natural resources with the advancing technological developments.

The involvement of private companies like Vedanta – known for violation of norms and polluting the environment – raises disturbing questions. The issue of severe air and water pollution due to the Vedanta-owned Sterlite Copper in Thoothukudi is well known and the plant has been closed after prolonged legal battle and peoples’ struggle. The loss of 13 lives in the police firing too remains a painful memory among the people of the state.

Hydraulic Fracturing Ban in Other Countries

The other hydrocarbons including shale gas, shale oil, tight gas, tight oil and gas hydrates are extracted using the non-conventional method called hydraulic fracturing or hydro fracking. Number of countries worldwide, particularly in the European Union and few provinces of USA have banned the hydro fracking process after widespread protests and the adverse impact on the environment.

Sethu Raman said, “The candidate for US presidential election, Bernie Sanders, has promised to ban the hydro fracking process all over the country if elected to presidency. But we are planning to start the process now which has been proved dangerous for the environment and naturally the human beings.”

Most of the countries are shifting towards generation of clean energy whereas India is planning to increase its hydrocarbon production to reduce the import dependency.

Adverse Impact of Hydro Fracking

The hydro fracking is carried out after the wells are dug for a depth of around 7,500 to 10,000 feet for the extraction of unconventional hydrocarbons. Vasudevan, an expert in the oil and gas industry told NewsClick, “A mixture of water along with chemicals and sand is used to break the sedimentary rocks at a pressure of around 1,500 pound-force per square inch (psi) to release the hydrocarbon trapped within. The USA has reduced its import dependency by a huge margin by large scale extraction of shale gas. But the opposition has been mounting against the fracturing process.”

There are reports of tremors being created resulting in seismic effects leading to earthquakes in the longer run. The water which comes out from the well after the process consists of different chemicals used for fracturing along with the deposits which had taken place thousands of years ago, which are highly toxic.

Also read: Farmers, Fishermen Protest Against Hydrocarbon Project in Delta Region of Tamil Nadu

“The danger of permitting private players like Vedanta is that they never allow the people to inspect the wells under their control. Nobody will be in a position to inspect the environmental impact of the project. This will lead to poor quality work in laying of pipes like what ONGC has done resulting in leakages and bursts,” Vasudevan added.

The amount of water required for a single well alone is around 15 to 20 crore litres of water. The quantum of water required remains the same for every single fracturing process. The massive usage of water in an agriculture-rich area like the delta districts is another threat to the public as well as the farmers with an already depleting ground water table.

“The water requirement is very high, but if the discharged water is properly processed by the operators, the treated water can be used for agricultural purposes. But looking at the poor quality of work due to the contractualisation by the ONGC, we cannot trust them to carry out all the processes,” he added.

Usage of Chemicals in the Process

The ONGC has preferred the usage of Low Toxic Synthetic Oil Based Mud (LTSOBM) as recommended by M/s Blade Energy for drilling the wells along with water. The methodology is being opted to avoid any delays in the drilling process as the pay thickness is found to be around 640m, which may not be broken with the normal drilling process. The LTSOBM is claimed to have no adverse impact on the environment with reference to the water discharge. However, the name itself suggests that the mixture is low toxic. M/s Blade Energy has been selected as the hydro fracking partner of the state-run ONGC.

Even though the materials listed out for the composition of LTSOBM are claimed to have no impacts on the environment, the case of severe water pollution cannot be ruled out. With the ONGC unable to prevent the leakages and spillages of oil on to the water bodies and agricultural lands, the threat of further damages cannot be ruled out.

OALP: Path Paved for the Corporates

The Open Acreage Licensing Policy (OALP) announced in 2017, as part of the HELP, provides numerous opportunities for the private players to loot the public money in the name of ‘Ease of Doing Business’ have been incorporated. The OALP provides the freedom to carve out the blocks of the private players’ choice as per the data available. The companies are provided with full marketing and pricing freedom apart from the low graded royalty rates. These relaxations are bound to increase the financial benefits of the private companies and reduce the income of the concerned state governments as well as the union government.

Financial Loss

The Directorate General of Hydrocarbons has claimed ‘low regulatory burden’ and ‘revenue sharing mechanism’ as specials feature of OALP. The provision sets free the private companies from any sort of regulation in their financial transactions. Even stricter regulatory measures have failed to contain the financial frauds committed by the private players. The low regulatory burden specifically implies that the government or any other related bodies are not going to interfere in the financial transactions of the company.

P K Rajan, an expert in the energy sector and TNSF office bearer, said, “The revenue sharing mechanism allows the companies to delay the payment to the government, as they can continue to claim that they have not made any profit from the project as long as they wish. This is in addition to low royalties to the government, freedom to select the blocks, marketing and pricing liberty and the right to retain the area for full contract period. The HELP itself seems to be framed with providing lot of financial gains to Vedanta, which any Indian citizen cannot accept”. This can be taken as a classic case of crony capitalism, where the companies are having a free run to loot the resources with so many exemptions.

He also added, “On the other hand, technological developments must be utilised for the country’s development, but that should not affect the society. The unconventional process is totally dangerous while the conventional process shall be continued with strict monitoring and regulatory mechanisms without causing damages to the environment and people living in the area, particularly the farmers.”

Privatisation as the Primary Agenda

The Modi government and the NITI Aayog continue to clear the path for the private companies by destroying the PSUs. The move to privatise even the profit-making PSUs has already created severe outrage across the country. Instead of strengthening the PSUs, the government continues to favour the corporates. This will lead to unemployment, underemployment, looting of public money, loos to the exchequer of the government and windfall profits to the corporates.

Also read: CPI(M) Conducts Mass Contact Programme Against Hydrocarbon Project

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