abce certificate
Sunday, 12 October, 2008, 13:10 GMT | more prices >>

ONGC walks away from Nigeria pair



By Upstream staff 

India's Oil &; Natural Gas Corporation (ONGC) has pulled out of two Nigerian deep-water oil exploration contracts over disagreements with majority stakeholder Korean National Oil Company (KNOC), Nigeria said today.

State companies KNOC and Nigerian National Petroleum Corporation (NNPC) signed production sharing contracts for blocks 323 and 321, among Nigeria's most promising acreage in the Gulf of Guinea, yesterday. KNOC obtained 60% of the blocks.

"The Koreans have won only one punch and the Indians have several options left ... These are two important companies that we want to see in Nigeria," said Tony Chukwueke, head of Nigeria's Department of Petroleum Resources.

"We wanted both of them to be there but when they couldn't agree among themselves, ONGC decided to pull out. It's regrettable to me," Chukwueke told Reuters.

South Korea, which has to import all its crude oil and is trying to increase supplies from outside the Middle East, had obtained preferential rights on a controlling stake in the two Nigerian blocks in return for huge investment promises.

Chukwueke said Korea would spend up to $6 billion on building two power plants with a capacity of 2250 megawatts and a 1200 kilometre gas pipeline.

Last November, Nigeria signed an agreement with a joint venture of ONGC and Mittal Steel, the world's biggest steel maker, to offer oil exploration rights in exchange for up to $6 billion in investments.

ONGC and London-listed Equator Exploration bid in consortium for a 25% stake in blocks 323 and 321 at an auction last August and emerged as the winners.

But ONGC later tried to take a greater stake, arguing that KNOC had failed to meet its payment deadline.

The preferential rights granted to KNOC meant the Korean player would have secured control of the blocks for a fraction of the $486 million it eventually had to pay in signature bonuses, had the Indians stayed away.

But the Indian bidding raised the stakes and KNOC was forced to match the offer to avoid losing them.

In the event, KNOC took 60% of blocks 323 and 321, Equator took 30% and a Nigerian partner took 10%, Chukwueke said.

ONGC was keen to increase its stake in the blocks after its attempt to buy a major stake in the giant Akpo oilfield was blocked by the Indian government over concerns about transparency.

Chukwueke said several arms of the ONGC group are in talks with the Nigerian government over possible deals involving access to promising oil exploration acreage in return for infrastructure investments in Nigeria.

Meanwhile, ONGC chief Subir Raha said the company is in talks to buy foreign gas and oil assets worth $15 billion.

"We are engaged in discussions for transactions worth $15 billion and we have the financial muscle to clinch the deals even if all of them materialise," he told Reuters.


Friday, 10 March, 2006, 12:09 GMT  | last updated: Friday, 10 March, 2006, 12:19 GMT

Nigeria duo: ONGC will not be taking part in work on blocks 323 and 321 after disagreements with partner KNOC prompted it to walk away from the deal
 

e-mail this article to a colleague


to email:  from:
comments: