New Delhi, Jan 30: Oil and Natural Gas Corp (ONGC)
will get back two highly prospective deep-water oil blocks in
Nigeria, which the government in the African country had three
years ago snapped from the Indian firm to award them to a
Korean company.
ONGC Videsh Ltd had in August 2005 won blocks 321 and
323, which hold inplace reserves of two billion barrels each,
committing USD 485 million in signing amount. But Nigeria
awarded these to Korean National Oil Corp (KNOC), claiming
that the Korean firm had a first right of refusal over the
blocks.
KNOC signed Production Sharing Contracts for 321 and 323
in January 2006, but paid only USD 92 million signature bonus,
forcing Nigerian President to cancel the allocation.
Nigeria`s Energy Ministry on January 6 wrote to OVL
saying the two blocks would be restored to the company if it
paid the USD-485-million signature bonus in full within 60
days, an official said, adding, OVL was evaluating the offer
and would respond before March 6.
OVL, UK-based Equator Exploration and Nigerian company
Owel E&P Ltd in 2005 had made the winning offer of about USD
175 million signature bonus for block 321 and USD 310 million
for 323. But KNOC exercised a right of first refusal, which it
had got in lieu of downstream investment commitments.
Nigeria awarded 60 percent stake in the two blocks to
KNOC and gave a 30 percent interest to OVL and its partners.
The remaining 10 per cent was awarded to local companies.
OVL refused the offer and the 30 percent share in the
Gulf of Guinea blocks was taken by Equator, the official said.
OVL and its billionaire partner Lakshmi N Mittal already
have three blocks in Nigeria -- OPL-279 and OPL-285 (won in
2005) and OPL-246 (awarded to it in November 2006).
The block or OPL-323, 80-km offshore the southwest coast
of Nigeria, is estimated to hold an inplace reserves of over
two billion barrels across six large prospects. OPL-321, which
lies west of OPL-323, is estimated to have similar reserves in
one very large prospect.
The official said KNOC had paid USD 92 million in cash
and offered a letter of credit to pay an additional USD 231
million to cover its 60 per cent interest in the two oil
blocks. Equator had paid a full one-third share totaling to
USD 161.7 million.
If OVL accepts, the Indian firm may get 60 percent share
in the block, while Equator may get to keep 30 percent. The
remaining 10 percent would go to local companies.
The portion of the signature bonus paid by KNOC is likely
to be refunded, he said.
The South Korean firm had promised to build a 1,200-km
gas pipeline from the southern delta to the capital Abuja and
2,250 MW of power plant in return for the exploration rights
in OPL-321 and 323.
Previously, ONGC Mittal Energy Ltd (OMEL), the joint
venture of OVL and steel czar-owned Mittal Investment Sarl,
had in 2005 won rights to explore in OPL-279 and OPL-285,
after committing USD six billion spending in the core sector
of Nigeria. It paid a signature bonus of USD 50 million for
OPL-285 and USD 75 million for OPL-279.
In November 2006, it paid USD 100 million to win yet
another block, OPL-246, which the then Nigerian government had
wrested from local company South Atlantic Petroleum (Sapetro)
before allocating it to OMEL.
For winning the blocks, OMEL had committed to build a
180,000-barrel-a-day refinery, a 2,000-MW power plant, and a
railway line connecting eastern and western Nigeria.
Bureau Report
