 "ONGC-Mittal gives up oil block in Nigeria")
OMEL — a joint venture of ONGC Videsh and Mittal Investment Sarl — had in 2005 won the right to explore for oil and gas in offshore OPL-279 and OPL-285 blocks after committing to invest $6 billion in an 180,000 barrels per day greenfield refinery, a 2,000 Mw power plant or a railway line from east to West of Nigeria. It paid a signature bonus of $50 million for OPL-285 and $75 million for OPL-279.
Sources said the company had in 2012 relinquished deepsea block OPL-279 after prospective hydrocarbon zones did not offer any viable commercial development. It offered to continue with the other block OPL-285 provided Nigeria relieved it of the USD 6 billion commitment.
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As the waiver was not agreed by Nigeria, OMEL transferred its 64.33 per cent stake in the block to partners Total of France and EMO, a local Nigerian company.
Prior to the transfer, Total held 25.67 per cent interest and EMO the remaining 10 per cent.
After this relinquishment, OMEL is left with just the Al-Furat project in Syria with China National Petroleum Company International. However the oil and gas field has been shut since late 2011 after the European Union imposed oil trade sanctions on Syria due to geo-political developments.
OMEL had in February 2007 singed production sharing contract (PSC) for OPL-279 and OPL-285.
As per the MoU for the blocks, the Nigerian government was to offer OMEL 120,000 barrels a day (6 million tons a year) crude oil lifting rights on a commercial basis, two deep water exploration blocks that would attract a signature bonus structured to reflect an appropriate carried participation in a proposed 180,000 bpd refinery and assurances of LNG off take.
Further, upon commercial discoveries of hydrocarbons in the two blocks and assured uplift of crude, the Indian combine would invest USD 6 billion in Nigeria on construction of railways, 2000 MW coal/gas based power plants, commercial agriculture and upgrade the Petroleum Training Institute in Delta State.
The Nigerian government had the right to decide the order of priority.
However, the downstream commitments had not been stuck to and OMEL has therefore requested the Nigerian National Petroleum Company (NNPC) for waiver of investment obligations attached to PSC of the blocks for entering into Phase-II, the sources said.
This downstream commitment has been found to provide a negative return as per a study conducted by Foster Wheeler on behalf of OMEL