New Delhi: ONGC Videsh Ltd has sought more time from the Nigerian government to decide on takeover of two highly prospective deep-sea oil blocks in the African nation as approval for its $291 million investment decision may have to wait till General Elections are completed.
OVL last month sought an extension of the 60-day deadline set by Nigeria for payment of signature bonus for taking 60% stake in blocks 321 and 323 as Oil Ministry declined to take its proposal to the Cabinet before new government takes over in May-end, industry sources said.
The company had in August 2005 won blocks 321 and 323, which hold inplace reserves of two billion barrels each, committing $485 million in signing amount. But Nigeria awarded these blocks to Korean National Oil Corp-led group claiming that the Korean firm had a first right of refusal.
The Korean group signed Production Sharing Contracts for the two blocks in January 2006 but paid only $92 million signature bonus, forcing Nigeria to cancel the allocation.
Sources said the Indian firm has asked Nigeria to furnish a copy of the contracts signed for the two blocks and details of the order that cancelled those contracts.
While Nigeria has announced cancellation of the Korean contract, it is yet to formally rescind the agreement and OVL wants to see it in black-and-white before making payment of $291 million for 60% interest in the two blocks.
Nigerian President had in January set 6 March as the deadline for OVL to make payment of the signature bonus, sources said, adding that OVL has not specified a new timeframe for deciding on the payment.
OVL, UK-based Equator Exploration and Nigerian company Owel E&P Ltd in 2005 had made the winning offer of about $175 million signature bonus for block 321 and $310 million for 323. But KNOC exercised a right of first refusal which it had got in lieu downstream investment commitments.
Nigeria awarded 60% stake in the two blocks to KNOC and gave a 30% interest to OVL and its partners. The remaining 10% was awarded to local companies.
OVL refused the offer and the 30% share in the Gulf of Guinea blocks was taken by Equator, sources said.
Nigeria in December notified the South Korean consortium of the cancellation, saying a fee of $323 million hasn’t been paid. The Korean consortium holds 60% of the two blocks, of which KNOC owns 43.88%, state Korea Electric Power Corp (Kepco) 8.78%, Daewoo Shipbuilding 5.85% and GT&R 1.5%.
Sources said KNOC had paid $92 million in cash and offered a letter of credit to pay an additional $231 million to cover its 60% interest in the two oil blocks. Equator had paid a full one-third share totalling to $161.7 million.