ONGC Videsh Ltd had in August 2005 won blocks 321 and 323, which hold inplace reserves of two billion barrels each, committing $485 million in signing amount. But Nigeria awarded these to Korean National Oil Corp (KNOC), claiming that the Korean firm had a first right of refusal over the blocks. KNOC signed Production Sharing Contracts for 321 and 323 in January 2006, but paid only $92 million signature bonus, forcing Nigerian President to cancel the allocation.
Nigerias energy ministry on January 6 wrote to OVL saying the two blocks would be restored to the company if it paid the $485-million signature bonus in full within 60 days, an official said, adding, OVL was evaluating the offer and would respond before March 6.
OVL, UK-based Equator Exploration and Nigerian company Owel E&P Ltd in 2005 had made the winning offer of about $175 million signature bonus for block 321 and $310 million for 323. But KNOC exercised a right of first refusal, which it had got in lieu of downstream investment commitments. Nigeria awarded 60% stake in the two blocks to KNOC and gave a 30% interest to OVL and its partners. The remaining 10% was awarded to local companies. OVL refused the offer and the 30% share in the Gulf of Guinea blocks was taken by Equator, the official said.