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Our Bureau

New Delhi , Sept. 17

THE Petroleum Ministry has advised the Oil and Natural Gas Corporation against entering into a memorandum of understanding with State Governments and "raising their expectations."

In a recent letter to the ONGC Chairman and Managing Director, Mr Subir Raha, the Petroleum Secretary, Mr S.C. Tripathi, emphasised that ONGC should stick to its core competence - exploration and production of crude oil.

The Petroleum Secretary's letter is seen as a reaction to ONGC entering into an MoU with the Karnataka Industrial Areas Development Board (KIADB) late last month for developing a coastal special economic zone (CSEZ) in Mangalore.

The MoU envisages investments worth Rs 25,000 crore, including the setting up of a LNG plant and a 1,500 MW gas-based power plant using lean gas.

The MoU was signed by Mr Raha, the KIADB Chairman, Mr N. Gokulram, and the Kanara Chamber of Commerce and Industry (KCCI) President, Mr R.D. Kini. It provides for the development of a CSEZ along with private sector developers through a special purpose vehicle to be supported by the State Government.

The Petroleum Ministry has, in the last couple of weeks, written several letters to ONGC, advising the corporate against extensive diversifications. The only diversification favoured by the Government is the setting up of a C2-C3 extraction plant with a capacity no greater than five million tonnes per annum.

Over the last two months, the Petroleum Ministry has indicated to ONGC that it is not keen on the latter pursuing forays into the power sector and the petrochemicals sector, where it plans to set up a linear alkyl benzene unit.

The Government's advisories will turn into interventions when ONGC brings the MoU projects to the board table, and the Government nominees are likely to oppose them.

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