OVL's Nigerian safari hits roadblock

ONGC Videsh Ltd’s (OVL’s) 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 licences for blocks 321 and 323 and decided to restore these to OVL, the overseas arm of Oil and Natural Gas Corp (ONGC).

Media reports from Abuja said a Federal High Court restrained the government from interfering with the operations of the two blocks. It allowed KNOC to seek a judicial review of the government order revoking its licence for 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 this could not go through. One of the fears that had prevented the government from giving OVL the go-ahead for the investment was KNOC filing a lawsuit against the cancellation.

OVL had in August 2005 won these blocks, which have in-place reserves of two billion barrels each, committing $485 million in signing amount. But Nigeria awarded these blocks to the KNOC-led group, claiming that the Korean firm had the first right of refusal.