A history of taking on the regulator

Hell hath no fury like a woman scorned, or a regulator spurned. That’s what the latest round of the DGH-ONGC saga looks like to the oil industry. This is not the first time that the director general of hydrocarbons (DGH) has had, to put it mildly, a disagreement with Oil & Natural Gas Corporation.

The two have been at each other for a long time, but ONGC seems to be getting the worse of the exchange right now — when DGH has questioned a major discovery reported by the company.

It all started in 2005, when ONGC’s former chairman Subir Raha opposed the appointment of VK Sibal to the company’s board. DGH as a regulator shouldn’t be on a company’s board, was the argument.

The grapevine at the time had been that Mr Raha was due to retire shortly and Mr Sibal would have a strong case to take charge of the company being on the board of directors already. That round went to ONGC as Mr Sibal was unable to make it to the board.

The next salvo was fired in September 2005, when DGH dashed off a complaint against ONGC to the stock exchange regulator, Sebi. The complaint alleged that ONGC had made public an oil discovery without informing the exchange first. This was followed by a lull — which foretold a major storm in this case.

In November 2006, when the bids for blocks under NELP VI were being evaluated, DGH had recommended that ONGC should not be awarded any of the deepwater blocks it had bid for. This was on the ‘basis of past performance’, which included ONGC’s poor success rate under NELP. Instead, it was proposed, that the blocks be awarded to international companies that had participated in NELP VI. This was perhaps the unkindest cut for India’s leading oil producer, which gets most of its oil from offshore reserves. The deepwater blocks were eventually awarded to ONGC.

ET INTELLIGENCE GROUP