ONGC Videsh Ltd's efforts to get back two highly prospective deep-sea oil blocks in Nigeria have hit a roadblock with a court in the African nation granting an interim injunction on the transaction.
Korean National Oil Corporation had moved court after the Nigerian government cancelled its licence for block 321 and 323 and decided to restore them to OVL, the overseas arm of India's Oil and Natural Gas Corporation.
Media reports from Abuja said a Federal High Court restrained the Federal government from interfering with operations of the two oil blocks.
It allowed KNOC to seek judicial review of the government order revoking its licence on the two blocks.
Nigeria had in early January asked OVL to pay $291 million to get back a 60 per cent share in the two blocks but it could not get a government go-ahead for the investment.
One of the fears that had prevented government from giving OVL a go-ahead for the investment was fear of KNOC filing a lawsuit against the cancellation.
OVL had in August 2005 won blocks 321 and 323, which hold in-place reserves of two billion barrels each, committing $485 million in signing amount. But Nigeria awarded these blocks to KNOC-led group claiming that the Korean firm had the Right of First Refusal.
But the Korean group did not pay the signing amount in full, leading to the cancellation.
Sources said with the government approval not coming forthwith, OVL last month had asked Nigeria for more time for making payments.
The Indian firm has asked Nigeria to furnish a copy of the contracts signed for the two blocks and details of the order that cancelled those contracts.
While Nigeria has announced cancellation of the Korean contract, it is yet to formally rescind the agreement and OVL wants to see it in black-and-white before making payment of $291 million for 60 per cent interest stake in the two blocks.
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 the first refusal which it had got in lieu downstream investment commitments.
Nigeria awarded 60 per cent stake in the two blocks to KNOC and gave a 30 per cent interest to OVL and its partners.
The remaining 10 per cent was awarded to local companies.
OVL refused the offer and the 30 per cent share in the Gulf of Guinea blocks was taken by Equator, sources said.
The Korean group signed Production Sharing Contracts for the two blocks in January 2006 but paid only $92 million signature bonus, forcing Nigeria to cancel the allocation.