Tuesday, December 29, 2009

Pachauri and Big Oil

The Indian company, Oil and Natural Gas Corporation Limited (ONGC), is ranked 152nd in the Fortune Global 500 list of companies. It contributes 77 percent of India's crude oil production and 81 percent of India's natural gas production.

The Indian government holds 74.14 percent equity stake in this company which, in the financial year ending 2009, achieved its highest-ever sales revenue of £8.6 billion.

And, for the period of June 2006 to June 2009 it had the good fortune to have as one of its non-executive directors a certain Dr R K Pachauri, also director general of TERI and chairman of the IPCC.

When it comes to "Big Oil", there are bigger but ONGC certainly qualifies as a member of this club. And at the heart of the beast for three years, at a crucial point in the development of the IPCC agenda, was Dr Pachauri.

During that time, though, no one could accuse the good doctor of getting rich out of the deal – not directly at any rate. The company paid its non-executive directors a modest attendance fee only. And for the two years of 2007-08 and 2008-09, such was his pitiful attendance record that he netted only just over £2,000.

However, Dr Pachauri is nothing if not good at multi-tasking and networking. And, while diligently looking after the interests of ONGC he was, of course, looking after his own, setting up an offshoot of his institute TERI as a separate company called TERI-Biotech.

This company had developed a patented process for the biodegradation of oil, which could be used for extending the productivity of oil wells and for cleaning up oil spills. And its first – and main – client became ONGC, which allowed it to test and refine its process.

So successful was the association, we are told, that the two companies, TERI-Biotech and ONGC decided to formalise the relationship, forming on 26 March 2007 a joint venture company called ONGC TERI Biotech Ltd (OTBL). TERI – director general Dr R K Pachauri – holds 47 percent of the equity, while ONGC has 49 percent. The remaining 2 percent is held by financial institutions.

Needless to say, the financial contribution to Dr Pachauri's evident wealth has not been recorded, but his continued partnership with "Big Oil" is now set to yield dividends. Reported in April 2009, two months before Pachauri stepped down from the main board of ONGC, the joint venture company had decided to bid for a share of a $3bn UN-funded contract to clean up the oil pollution in Kuwait, left behind by Saddam's invasion.

That Pachauri just happens to be a senior official of a UN institution is, of course, a complete coincidence. But his joint company seems remarkably confident of getting a sizeable slice of the work, so much so that it was telling the Indian financial press that it has "a plan to clock a top line of $2.1 billion in the next three to four years."

One can only wish the enterprising Dr Pachauri the best of luck in his venture, but it should be recorded that, while the likes of George Monbiot are quick to associate "climate deniers" with Big Oil, no one is actually closer than his all-time hero, Dr R K Pachauri.