NEW DELHI, November 5: What is even more shocking than the sharp fall in oil production in the Neelam oilfields is the cavalier manner in which the authorities are dealing with it. For over a year now, ONGC -- which operates the field off Mumbai -- and the Ministry of Petroleum have been exchanging correspondence on the modalities of finalising a proposal to rope in a joint venture partner to revive the field. They are, however, still no closer to taking a decision.

Meanwhile, in this period, the estimates of recoverable oil in the field have, once again, been lowered to around a third of the initial estimates -- at current oil prices of around $18 a barrel -- that translates into a loss of around $5 billion over the life of the field. In other words, the decline in production of oil from this field will result in a situation in which the country will have to make additional imports of this amount. If, however, things are allowed to drift, the current production may also decline. Several experts believe that the field is being damaged with each passing day.

What's more, according to a note written by ONGC to the Ministry, if a good joint venture partner is found, it will be able to recover over 40 per cent of the oil reserves in the field. At present, ONGC feels it can recover only 25 per cent of the reserves as against international recovery rates of 40 per cent to 55 per cent. In other words, a joint venture with a good oil major could help it recover anything between 14 and 28 million tonnes extra oil from this field alone.

ONGC chief B C Bora also admits that they are having little success with reviving the field. His last note to the Ministry in April asking for clearance to set up a joint venture with a foreign oil company, states this in no uncertain terms. He said that this was critical since ``in-house efforts in analysing the problems and the actions taken thereof to arrest the production decline rate have not yielded the intended results.''

The Ministry, however, refused to consider this proposal seriously as it felt that it didn't contain enough details for them to take any decision. This, according to sources, was conveyed to ONGC on various occasions. Ministry sources now state that since the Group of Ministers has cleared the contracts for the discovered oil fields -- the Cabinet is yet to clear the proposal -- it should now be possible for ONGC to go ahead on its own and finalise a joint-venture partner. ONGC, however, is not quite convinced by this logic and believes specific permission is still required. Which means that it will be several months at least before any concrete steps are taken to invite and then study the bids of various foreign oil majors. the names being suggested are Amoco, Occidental, Marathon, Shell, Arco, Chevron and Total. According to some of these companies, it will take them at least three to four months to study the data on the fields after the bids are invited, and perhaps a similar amount before they are able to come up with solutions on how to revive the field. In other words, it will take around a year before any concrete solution can be expected in this area.

The problems of the Neelam field -- a rising `gas-oil' and `water-oil' ratio -- are very similar to those of the Bombay High fields. According to Bora, for instance, the `water-cut' in the field was 40 per cent, or four times that expected, because the water they were injecting into the field to augment production was seeping to other wells. This, according to experts, is also one of the problems faced in Bombay High, and stems from inadequate information about the nature of the field. Incidentally, ONGC's efforts to revive the Bombay High field through water injection over the past five years haven't amounted to much either, with production levels still not rising to expected levels.