OVL's Nigerian safari hits roadblock

ONGC Videsh Ltd's (OVL) efforts to get back two highly prospective deep-sea oil blocks in Nigeria have hit a roadblock with a court in the African nation granting an interim injunction on the transaction.

Korean National Oil Corp (KNOC) had moved court after the Nigerian government cancelled its licence for block 321 and 323 and decided to restore them to OVL, the overseas arm of India's Oil and Natural Gas Corp (ONGC).

Media reports from Abuja said a Federal High Court restrained the Federal Government from interfering with operations of the two oil blocks.

It allowed KNOC to seek judicial review of the government order revoking its licence on the two blocks.

Nigeria had in early January asked OVL to pay $291 million to get back a 60 per cent share in the two blocks but it could not get a government go-ahead for the investment.

One of the fears that had prevented government from giving OVL a go-ahead for the investment was fear of KNOC filing a lawsuit against the cancellation.

OVL had in August 2005 won blocks 321 and 323, which hold in-place reserves of 2 billion barrels each, committing $485 million in signing amount. But Nigeria awarded these blocks to KNOC-led group claiming that the Korean firm had the Right of First Refusal.

But the Korean group did not pay the signing amount in full, leading to the cancellation.