ONGC bags 2 Nigerian oil blocks

Oil and Natural Gas Corporation (ONGC) will get back two highly prospective deep-water oil blocks in Nigeria, which the government in the African country had three years ago snatched from the Indian firm to award them to a Korean company.

ONGC Videsh had in August 2005 won blocks 321 and 323, which hold inplace reserves of 2 billion barrels each, committing $485 million (Rs 2376.5 crore) in signing amount. But Nigeria awarded these to Korean National Oil Corporation (KNOC), claiming that the Korean firm had the first right of refusal over the blocks.

KNOC signed production sharing contracts for 321 and 323 in January 2006, but paid only $92 million (Rs 450.8 crore) 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 $485 million (Rs 2376.5 crore)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 in 2005 had made the winning offer of about $175 million (857.5 crore) signature bonus for block 321 and $310 million (Rs 152 crore) for 323. But KNOC exercised a right of first refusal, which it had got in lieu of downstream investment commitments.

Nigeria awarded 60 per cent stake in the two blocks to KNOC and gave a 30 per cent interest to OVL and its partners.

The remaining 10 per cent was awarded to local companies. OVL refused the offer and the 30 per cent 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).