OVL's Nigeria plans shot down, again

Govt had ruled out earlier proposal to buy majority stake.

The petroleum ministry has shot down state-owned oil major ONGC Videsh's proposal to pick up a stake in two exploration blocks in Nigeria, after nearly a month of dithering on the issue. This is the second instance when Oil and Natural Gas Corporation's (ONGC) plans to acquire assets in Nigeria have been thwarted.

Petroleum Minister Murli Deora had reservations about the nature of the deal. The ministry would not be taking the proposal to the Cabinet, a source said. With the nature of investment envisaged, ONGC Videsh cannot bid without Cabinet approval.

Last year, the Cabinet had rejected the proposal for ONGC's acquisition of 45 per cent stake in South Atlantic Petroleum's Akpo oil and gas field in Nigeria.

Regarding the new proposal, ONGC Videsh had already lost out on acquiring the majority stake in the blocks as the government had delayed its decision. The company had then planned to seek approval for just 25 per cent stake.

With this move, India would lose out on a sizeable supply of oil, sources said. While one block would have yielded 5-10 million tonne per annum (mtpa) the other was expected to yield 15-20 mtpa, and even a fourth of this was huge, they added.

The ministry had approached the Cabinet on February 1 to allow ONGC to pick up 90 per cent stake in blocks 321 and 322 in Nigeria through its foreign arm ONGC Videsh for $470 million. This was after an earlier agreement where the Indian company would have got 25 per cent holding and Korean National Oil Company would have got 65 per cent.

However, the proposal was deferred, with the ministry of finance and the Planning Commission objecting to certain aspects of the deal. An internal study of the Director General Hydrocarbons revealed that one of the blocks was less prospective than the others.