Al Ngullie & Thannganing Hungyo
Dimapur | August 30
Notwithstanding the familiar reluctance of the Nagaland government to comment on the ‘share’ it would be receiving from the oil extracted by Canoro Resources Ltd in Champang, it is disclosed that roughly 100-115 million in dollars would be received as royalty for a 2-3 year explorations. The stakes are high with too many a stakeholder and many a stake to overcome but optimism is expressed that the ‘impressive’ royalty from the oil explorations would serve the Government of Nagaland well.
Canoro’s president and CEO Les Kondratoff today said that a royalty of 20% would be paid to the Government of Nagaland for every barrel of crude oil extracted from Champang, under Wokha district. Kondratoff said that Canoro Resources Ltd., ONGC’s principal oil explorations partner, would undertake oil production at the rate of around $ 8 to $ 9 per barrel for which a 20% royalty i.e., $ 1.6 (estimated on current currency rate) would be for Nagaland government.
‘The government of Nagaland will receive about roughly 100-15 million dollars as royalty. The royalties should exceed 100 million dollars’ he stated. However, he opined, Champang is only a small field; it is estimated that there are hundred millions more (of crude oil reserves) in the belt, CEO Kondratoff told The Morung Express at Neithu Resort, near Chumukedima today. He also said that main thrust areas have yet to be surveyed for feasibility and long-term business prospects.
However, the period of oil production for which the figure of royalty was cited for, was not specified. However senior officials of Canoro Resources later informed that the government had issued in August 2006 a PEL (Petroleum Exploration License) for seven years.
The CEO also informed to have met with Nagaland Chief Minister Neiphiu Rio as well as the NSCN-IM leaders. According to the CEO, both the state government and the NSCN-IM had reiterated to the company the need to respect the wishes of the people. According to the CEO, the ‘wishes of the people’ include employment-generation, good roads and infrastructure and company-initiatives toward growth of local economy, particularly of the areas in concern. He said to drill a few wells by first half of next year if all goes well. However Champang’s environment remains a concern for him. ‘The leakage of 9 oil wells earlier dug by ONGC poses a grave environmental threat with spillages causing contamination of groundwater’ he said adding that the problem gets compounded during rainy days. Very few installations in India undertake the expensive operations of cleaning up the soil after such wells are repaired and the oil contained in them extracted, he explained.
The Canoro president also informed that the company is in touch with the NSCN-IM. He said that the Naga underground outfit has expressed support if the company’s oil ambitions are consonant with the ‘wishes of the people.’ Quoting NSCN-IM leaders he said Canoro’s activities would be monitored. He explained that considering the history of the Naga people, it is imperative that the people’s sentiments as well as of the government, be kept in focus.
Kondratoff also expressed welfare as a support-objective of the company. He assured to instate welfare initiatives even while undertaking oil productions. “If we’re investing we need to know liabilities” Kondratoff explained. He however expressed concern that the presence of ‘several stakeholders’ may delay operations. “Nagaland is like a democracy on steroids. Assam and Nagaland are day and night” he observed adding that all “principal stakeholders” have been met with.
In regard to the recent allegations of corruption against Canoro and a hitherto unknown entity called Spice Resource Management (SRM), Kondratoff refused to comment. He also refused to make any comment on the reported simmering division in the Champang Village Council as well as sections of the Champang people, including landowners over the issue of land explorations.
Meanwhile, it remains unclear for how long or how much, oil extracting activities the company would be undertaking. So far the Nagaland government ahs remained tight-lipped on the whole ONGC-Canoro issue. Canoro’s director of explorations GK Handique said that while the PEL stipulated seven years, it also depends on the presence of hydrocarbons in each block designated for Canoro. Surprisingly, he also said that the 20% royalty to the government of Nagaland has yet to be ‘arrived’ and the matter is “quite over far away.” This would come only at a later stage depending on factors like the level/amount of reserves, outlay in explorations and currency business involved, Handique said.
Morung Express News
The arithmetic of oil
• Estimated crude oil reserves in the Champang belt: 600 Million tonnes
• PEL to Canoro for ‘explorations:’ seven years
• Rate for extracting and disposal of one barrel of oil: $ 8
• Nagaland Government’s royalty per barrel: 20% or $ 1.6 dollars
• Champang landowners’ royalty: 2%
• Average extraction estimate per day: 250 tonnes
• Stakeholders: Nagaland government, local public, Naga outfits, ONGC
US$ 1 is equal to INR 41.035 (present value)
