A final decision (on joining forces with KNOC) would depend on the Nigerian Government's stand.

Pratim Ranjan Bose
Richa Mishra

Kolkata/New Delhi, Feb. 10

ONGC's proposal for acquisition of interest in two large exploration blocks in Nigeria now seems headed for a new twist.

The Indian exploration and production major is weighing the option of joining hands with Korea National Oil Company (KNOC) for prospecting oil in the said blocks.

While the detailed equity structure is still not clear, senior level ONGC officials told

Business Line

on Thursday that the company was now actively considering the proposal of joining hands with KNOC. However, a final decision (on joining forces with KNOC) would depend on the Nigerian Government's stand, it is learnt.

Besides, a lot would also depend on who would be offered the majority stake in the blocks, he said, adding that it was a good property and the company was keen to have a re-look at the whole deal.

The Ministry of Petroleum and Natural Gas had approached the Union Cabinet on February 1, 2006 to seek its approval for picking up 90 per cent stake in exploration blocks 321 and 322 in Nigeria through ONGC Videsh Ltd (OVL) at a total consideration of $485 million.

ONGC lost the race

: Though ONGC had emerged as the highest bidder for the majority stake in the prime deepwater acreage in August 2005, it had lost the race to KNOC, which had the pre-emption rights. The latter was reportedly preferred over ONGC for pledging substantial infrastructure investment in the African nation. Accordingly, ONGC was offered a minority 25 per cent stake.

However, when it was found that KNOC was not showing much interest, the Nigerian Government had offered OVL the blocks. This had invited sharp reaction from KNOC, which reportedly claimed it already held the right to secure 65 per cent operating stake and ONGC 25 per cent. The Nigerian Government has reserved 10 per cent stake in the blocks for a local partner.

The claim (from ONGC) and counter-claim (from KNOC) has created sufficient confusion over the exact equity structure of the blocks and the Cabinet Committee had reserved its opinion on the issue. ONGC, however, has ensured that irrespective of the confusion, "the transaction is on".

(This article was published in the Business Line print edition dated February 11, 2006)
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