The Hindu Business Line : Delay proves costly for ONGC in Nigeria

Losing out
ONGC chief Mr Subir raha said, "We were originally in fray to pick up 90 per cent stake in the two blocks but because of the delay that offer no longer stands."
Petroleum Minister Mr Murli Deora said, "A decision was deferred as doubts were cast on the size of investment."

New Delhi , March 3

The Chairman and Managing Director of Oil and Natural Gas Corporation (ONGC), Mr Subir Raha, today said that the Government delay in approving ONGC Videsh Ltd's (OVL) investment in acquiring stake in two oil exploration blocks in Nigeria has cost the company a higher stake in the deal.

"We were originally in fray to pick up 90 per cent stake in the two blocks but because of the delay that offer no longer stands," he said.

OVL, the overseas arm of ONGC, is now being offered a much lower stake, he said. Mr Raha, however, refused to disclose any further details. 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.

Doubt over investment size

Asked about the decision, the Petroleum Minister, Mr Murli Deora, said, "A decision was deferred as doubts were cast on the size of investment." He did not comment on when the Cabinet would take the proposal again. 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 (KNOC) delayed submission of bank guarantees for payment of signature bonus.

The in-place reserve estimates for OPL 321 ranges between 5,550 and 12,950 million barrels with recoverable reserves estimated at 1,540-3,600 million barrels. OPL 323 has in-place reserves 4,430-9,550 million barrels with recovery estimated at 1,730-3,950 million barrels.

Cairn Energy

ONGC is in talks with Cairn Energy of UK to buy its Indian assets, which include the oilfields in Rajasthan.

"Cairn is one of the interests we are looking at," Mr Raha said. He, however, did not elaborate on the stage at which the talks stood.

According to the industry grapevine Cairn made the offer to sell-off its 22.5 per cent stake in the Ravva oilfield, which produces about 50,000 barrels of crude oil per day, and majority ownership in RJ-ON-90/1 block in Rajasthan.

The talks with Cairn have been hanging for sometime as the two could reach a consensus on valuation. Sources said ONGC found the asking price by Cairn very high.

ONGC is already a partner with Cairn in Ravva and Cambay basin fields and had proposed to jointly build a Rs 8,000 crore refinery at Rajasthan.