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Price of extremism - The Economic Times

Editorial ()
2 December 1996

Title : Price of extremism
Author : Editorial
Publication : The Economic Times
Date : December 2, 1996

The North-East will have to first resolve extremism
before its huge natural wealth can be exploited. Last
week's bomb-blasting of two crude oil pipelines by sus-
pected ULFA extremists may disrupt supplies to Barauni
and Bongaigaon refineries for weeks. The act is doubly
reprehensible at a time when crude output in the country
has dropped significantly (due to what seem to be techni-
cal inadequacies in offshore areas like Bombay High and
Neelam). Concurrently, there has been a sharp rally in
world oil prices and the government has yet to garner the
political courage to revise oil prices. The latest
incident is not an isolated one. For years now, oil
companies in large parts of the North-East region have
been the target of threats and disruptions by ultras,
including kidnapping of personnel. This has dampened the
morale of site managers and workers, curtailed crude and
gas extraction operations, reduced exploration activity,
and held up several large downstream projects, like the
Assam gas cracker plant.

For a decade and more, crude output in Assam has stagnat-
ed at 5 million tonnes per annum, despite the presence of
such Category 1 basins in the state as Upper Assam and
Assam-Arakan. Ditto for gas output. And the worsening
law and order problem is the single important reason for
the present state of affairs. Many of the oil fields,
like Naharkatiya, are aged, and production has been
declining. Reports say 80 per cent of ONGC's wells in
the region are on artificial lift. In fact, ONGC's gross
revenues from oil and gas in Assam has come down from Rs
730 crore in 1993-94, to Rs 683 crore in 1994-95, and
further down to Rs 670 crore in 1995-96 (which means
correspondingly lower royalty for the state). The drop
in revenues has meant that outlays for exploration has
been reduced by an estimated 40 per cent. In neighbouring
Tripura which has recoverable gas reserves estimated at
whopping 15.67 billion cubic metres ONGC's exploration
work has reportedly been confined to a radius of 100 km
from Agartala only 3 of the 14 structures identified in
the state because of insurgency. The shortage is not of
investible funds, but of a stable polity.

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