Steel czar Lakhsmi N Mittal and partners Oil and Natural Gas Corp (ONGC) and Total SA of France will invest $150 million in exploration of oil in Nigeria.
ONGC Mittal Energy Ltd, the joint venture of ONGC Videsh Ltd and Mittal Investment Sarl, had in 2005 won two exploration areas - OPL 285 and OPL 279 - in Nigeria. In November 2008, they got French energy major Total as technical partner in the two blocks.
"Our commitment is to spend $75 million in first phase of exploration on each block," an OMEL spokesperson said.
Exploration period commenced on February 23, 2007, for both the blocks. "We plan to commence drilling in the second half of 2009 on OPL 285 and in 2010 on OPL 279 depending on rig availability," he said.
Nigeria was the first place where the much hyped joint venture between the Indian flagship and the holding firm of Mittal had secured an overseas energy asset.
For each block, the first exploration period, which ends in 2012, encompasses the commitments of acquisition and processing of 500 sq km of 3D seismic and the drilling of one exploration well. In the second five-year exploration period, which is optional, the work commitments will cover the acquisition of a further 500 sq km of 3D seismic and the drilling of two wells.
The spokesperson said Total has farmed in OPL-279 and OPL-285 at cost. "Operatorship remains with OMEL. Total is the technical advisor to OMEL. Total has reimbursed OMEL with pro rata share of signature bonus and past costs."
Total has 25.67 per cent and 14.5 per cent stakes in deep offshore licence OPL 285 and OPL 279 respectively. The Nigerian company EMO Exploration and Production is also partner on both of the blocks.
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OMEL had in 2005 won rights to explore in OPL-279 and OPL-285 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 the West of Nigeria. It paid a signature bonus of $50 million for OPL-285 and $75 million for OPL-279.
OMEL, the spokesperson said, has chosen refinery project as preferred downstream project but details such as cost, capacity and timeframe were not yet finalised.
Covering an area of around 1,170 sq km, OPL 285 is located 80 km offshore, near the Bonga field, in water depths ranging from 400 to 900 metres.
OPL 279 is located some 100 km offshore, near the Ehra and Bosi fields, in water depths ranging from 800 to 1,800 meters. The licence covers an area of around 1,125 sq km.
OVL, the overseas investment arm of ONGC, holds 49.98 per cent stake in OMEL while Mittal Investments has 48.02. SBI Caps has the remaining 2 per cent.