Monday, July 4, 2016

Feasibility of privatisation of Oilfields in Assam

The government has recently arrived at a decision to privatise 12 small oilfields in Assam. This, as part of the new policy towards privatisation of 67 small oil fields in India, has drawn understandably strong reactions from the vocal civil society of Assam. Assam has had a long chequered history with oil, with its roots in the Assam movement when slogans like “Tez Dim Tel Nidiu” had evoked sentiments of all. Thus naturally any talk about oil in Assam evokes strong reactions.

30 years have passed since the movement have taken place in Assam. The homegrown Oil companies in Assam like Assam Oil have withered away. Refineries like Digboi oil refinery with its falling production limit are now within the gambit of Oil India Limited (OIL). And millions of metric tonnes of oil and oil equivalent gas stand unused. Despite having immense potential, the natural resources in Assam lie unused. Royalties from oil payments are stuck in legal battle since 2008. And a large demographic population stands unemployed.

It is in the background of these issues that the question of privatisation of oilfields in Assam must be addressed. The first theory, that is often propounded whenever there is talk of foreign investment, is the bogey of foreign investment. The image of foreigners, exploiting resources often make for vivid imagery in the socio political landscape of Assam. Yet the fundamental point is the fact that mere declaration of a policy intending to invite foreign investment will not automatically translate into foreign investment. The global economy is at an all time low, Brexit has hit international markets and oil prices are yet to see a high. This, seen with the domestic market not being robust, the chance of foreign investors flocking in to invest in Assam seems quite remote. To this, when one adds the perception of North East as an investment location, the chances of foreign investments seem even bleaker. Hence the chance of foreign incursion in oilfields is unfounded.

Another aspect of the privatisation debate is the “threat to environment”. It is true that extraction of natural resources always extracts its cost from the environment. However, in a fast developing world where oil is the basic consumption fuel, from machines to transport, to sit on top of oil reserves and do nothing makes no sense. At some point there has to be systematic efforts to harvest natural resources. However this must be coupled with the twin paradigm of sustainable technology and accountability.

Today a number of companies worldwide are investing and implementing technologies that make oil and gas drilling as sustainable as possible. For example Cenovus, a company working in northern Alberta, Canada is trying to minimize their impact on this pristine landscape by using reusable wooden mats to create temporary access roads. The wooden mats provide stable work conditions for equipment and the crew and help protect the ecosystem underneath. When finished, they simply pick up the mats and move them to the next location. Petrobus has been drilling in the Urucu province in the Amazon. In a span of more than two decades, the company has built on less than 0.5 percent of the site; the rest is undisturbed. Petrobras has built 71 kilometers of paved roads, but they are built only when needed. When doing exploratory drilling, for example, Petrobras doesn't build a road to a potential site; it clears a patch of land and brings in equipment by helicopter. If the exploratory work proves disappointing, native plants from an on-site nursery are brought there to restore the forest. The nursery, at last count, had about 200,000 seedlings and more than 85 varieties of orchids. Apart from these, companies can go paperless and give back to the community in form of plantation programmes among others.

 Thus, in the 21st century oil and gas drilling is beginning to evolve as a sustainable face that can’t be ignored. Steps like giving back to marginalised communities in form of building hospitals and schools would further strengthen this process. Though contested, it can’t be completely denied that the poor have less access to sustainable means of development. For example, while the poor use firewood for cooking,  a better option is  use of cooking gas, which is more sustainable. Hence upgradation of livelihood has an indirect spinoff on environmental sustainability as well.

There is however the “perception” of environmental damage that is much harder to confront. In the last thirty years, streams have grown dry, hills have been mowed down and river beds have become thriving business avenue for a large number of people. A Ramsar site of repute, the Deepor Beel, is under continuous threat of encroachment. The hills around Guwahati have become the site of illegal settlement. And yet it is oilfields alone whose exploration is seen as bringing out massive environmental upheaval in Assam!

The threat to environment is real. However the real solution to that lies in accountability and self restraint. Environment will wither away irrespective of whether investments in oil fields are made or not, if there is no accountability. Hence a nuanced approach would be to involve in the oilfield operations and ensure their environmental accountability. Social and Environmental Impact Assessments are the heart and soul of any modern day programme. Accountability must be placed upon those who seek to invest in the oilfields with assurance, not only to give back to the community but also contribute towards innovating sustainable measures for themselves. Steps like construction where only needed, would ensure that balance is maintained between the quest for oil and gas and the environment.

The question arises, as to how the privatisation of oilfields can benefit Assam. The answer to that would lie within the socio political milieu of Assam, if it can assert itself as a responsible actor that is vigilant and cooperative, instead of indulging in uninformed rhetoric. According to the NSS 66th Round Sample Survey, Assam has the third highest unemployed population in the country. While urban unemployment stands at 52% rural unemployment stands at 39%. The numbers for urban unemployment seem dismal already, the lower rate of rural unemployment is no cause for cheer either. The number stands at 39% because primarily rural employment is in agriculture that itself is plagued by large scale underemployment and disguised unemployment. If these numbers were rectified, the number of unemployed in rural areas would rise even higher.

The State GDP of Assam during 2013-14 grew by 14.68%; when states like Bihar grew by 25%  and Goa by 39.84% . While the growth of Assam is slightly above the national average of 14%, yet this growth rate, seen in the context of large number of unemployed people, does not seem enough to fulfil the aspirations of a burgeoning youth population.  At this juncture, government estimates of the 12 oilfields brining in 4000 crore to Assam would act as a big boost to development of the state. This is, apart from the money that would flow into the state coffers, in form of oil royalties.

This auction must also be seen as an opportunity to develop homegrown potential within the state. Today, Gujarat Power Corporation Limited takes part in auctions for oilfields and has ventured into new areas like solar energy. Tripura has a similar success story with regards to gas exploration. The process of auction opens the possibility of reviving Assam Oil as a premier oil and gas exploration company. Also if such small oilfields are developed, not only would a large number be employed, but also create the human resource of trained manpower to work for oil companies in the future.

The debate around privatisation of oilfields, therefore, has to be approached in a nuanced manner. A jingoistic approach cloaked in unwillingness to reason would harm the interests of Assam, rather than protect it.

-          Ibu Sanjeeb Garg ( Views expressed are personal)

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