The Hindu Business Line : ONGC-Mittal’s Nigeria oil blocks may face scrutiny

Riyadh, November 16 The oil blocks acquired by the ONGC- L N Mittal Group combine, OMEL, in Nigeria in 2005 may face scrutiny by the new Nigerian Government. The Minister of State for Energy (Petroleum) of Nigeria, Mr Odein Ajumogobia, said on the sidelines of the third OPEC Summit, “We are reviewing blocks that were awarded by the previous Government. There were complaints about the procedure used in awarding some of the blocks and we are now investigating that.”

Nigeria’s new Government is reviewing the awarding of oil blocks by the previous regime after it received complaints of irregularities in the allotments. Indications are that some domestic and foreign entities that obtained licenses to explore hydrocarbons may end up losing them. When asked if OMEL’s blocks OPL 285 and OPL 279 were under the scanner, he said, “I don’t remember the names of the blocks.”

OMEL had in 2005 won rights to explore in OPL 279 and OPL 285 after committing to invest $6-billion in an 1,80,000-barrels-per-day greenfield refinery, a 2,000-MW power plant and a railway line from East to the West of Nigeria. OMEL paid a signature bonus of $50 million for OPL 285 and $75 million for OPL 279.

During a subsequent licensing round, which followed the general elections in Nigeria, OMEL was given preferential bidding rights for yet another block (OPL 250), but it did not submit any bid.

Preferential bidding rights accord a company the first right of refusal where the company has the right to match the highest bid for the block and bag the exploration acreage.

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