New Delhi: Nigeria will not let ONGC-Mittal Energy Ltd, or Omel, explore for oil and gas at any further hydrocarbon blocks unless it fulfils a promise to invest in that country’s infrastructure, a top official said.
Omel—a venture of state-owned Oil and Natural Gas Corp. Ltd and Mittal Investments Sarl—has promised to spend $6 billion (Rs29,160 crore today) to build a 180,000-barrel-per-day refinery, a 2,000MW power plant and a railway line connecting eastern and western Nigeria in lieu of the right of first refusal for three hydrocarbon blocks.
The company was awarded rights to explore for oil and gas in two blocks in 2006 after it promised to invest in infrastructure.
“Until and unless Omel fulfils its infrastructure creation commitments, including the railway construction, no further blocks will be awarded to them,” Emmanuel O. Egbogah, special adviser to the Nigerian president, said on the sidelines of Petrotech 2009 conference and exhibition currently under way in New Delhi.
“Unfortunately, they have not done anything. We fail to understand what the problem is,” Egbogah said.
Mittal Investments, a firm owned by the family of Lakshmi N. Mittal and majority shareholder of the world’s biggest steel maker ArcelorMittal, has a 50.10% stake in Cyprus-registered Omel.
ONGC Videsh Ltd, or OVL, the overseas arm of India’s largest oil explorer, holds the remaining 49.90%. Omel operates as an ONGC subsidiary.
Reacting to the Nigerian official’s statement, OVL’s chairman R.S. Butola said “We are not aware of any such decision.” Omel did not respond to email queries.
Nigeria has the largest hydrocarbon reserves in Africa, estimated at 30 billion barrels of crude oil and 187 trillion cubic feet of gas.
The blocks Omel has got for exploration—OPL 212 and OPL 209—have potential recoverable reserves of at least 1 billion barrels of oil and natural gas equivalent, according to ONGC.
India, world’s fifth largest energy consumer, imports 75% of its requirements and accounts for some 3.5% of global consumption. It uses about 112 million tonnes per annum, or mtpa, of petroleum products a year and overseas tie-ups are aimed at securing supplies.
The country’s petroleum consumption is expected to rise to 135mtpa by 2012, according to International Energy Agency.
It will become the world’s third largest oil importer after the US and China before 2025, with its energy demands expected to at least double by 2030, the agency estimates.