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Our Bureau

Cabinet has doubts over investment size

New Delhi , March 9

ONGC Videsh Ltd (OVL), the overseas arm of ONGC, may have to let go off an opportunity to acquire stake in two oil exploration blocks in Nigeria.

According to sources, the Petroleum Ministry is understood to have struck down the proposal of OVL to pick up stake in the two blocks.

OVL, which had missed the bus for acquiring a larger stake in the two blocks, was under pressure from the Nigerian side to give a commitment for bid bonds by March 10 for acquiring stake.

Minority stake opposed

The Government is also understood to have advised the company not to pursue a minority stake in the blocks, official sources told Business Line. Besides, the Petroleum Ministry has also indicated to the company that any decision on the issue is unlikely to be taken immediately. Therefore, the company may not be able to give any commitment to Nigeria by March 10.

The company was originally in the fray to pick up 90 per cent stake in the two blocks but because of the delay in seeking mandatory approval that offer no longer stood. OVL is now being offered a much lower stake.

Last month, the Union Cabinet had deferred a decision on allowing OVL to plough back into two exploration blocks in Nigeria, which it had despite being the highest bidder lost to a Korean firm. It had deferred the decision as doubts were cast on the size of investment. The Cabinet's permission was sought to pay signature bonus of $485 million to Nigeria's Department of Petroleum Resources for beginning work on OPL-321 and OPL-323.

OVL got the opportunity to get back the blocks after Korean National Oil Corporation delayed submission of bank guarantees for payment of signature bonus.

More Stories on : New Projects | Policy | Petroleum | Oil & Natural Gas Corporation Ltd

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