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Win-win Collaboration Between Government of Nigeria and OMEL

Source: www.gulfoilandgas.com 11/14/2005, Location: Africa

ONGC Mittal Energy Ltd.(OMEL) entered into an MoU with the Ministry of Petroleum Resources, on behalf of Nigeria, in Abuja on 10th November, 2005. The MoU envisages several projects to address the imperatives of the Government of Nigeria as well as to meet India's surging energy requirements, in a mutually beneficial manner within the context of strategic economic cooperation between Nigeria and India.

The essence of the MoU is production of an average 650,000 barrels/day Oil + Oil equivalent Gas (O+OEG) per day (equivalent to 32.5 million metric tonnes per year) over 25 years by OMEL from the deepwater exploration blocks to be allocated by Nigerian Government.

The Government of Nigeria expressed willingness to also offer to OMEL the lifting rights of 120,000 bbl/day of Nigerian crude oil on commercial basis; this includes 40,000 bbl/day now being lifted by Indian refineries. The Government of Nigeria further offered an assurance of substantial LNG off-take out of the Government's share of gas.

Responding to the expectations of the Government of Nigeria, OMEL has proposed to build an export-oriented refinery of 180,000 barrels/day capacity based on Nigerian crude, subject to technical and financial viability. OMEL has also offered to invest USD 6 Billion in Nigeria on 2000 MW Coal and/or gas-based power plants, railway systems and capacity-building. OMEL will also facilitate upgradation of the Petroleum Training Institute (PTI), Effurun, Delta State. These investments by OMEL will be calibrated to the average sourcing of Oil & Gas from the two good quality deepwater exploration blocks to be selected and operated by OMEL on the basis of Production Sharing Contracts.

Joint Working Groups will now be tasked to develop definitive agreements and corresponding action plans for each of the component projects. ONGC Mittal Energy Services Ltd. (OMESL) will be developing the required trading, shipping and terminalling facilities.

"depending on the geo-scientific parameters of the deepwater exploration blocks to be selected, it should be possible to commence the deliveries under the 650,000 barrels/day transaction in 5 to 7 years time. In the meantime, actions are being taken to operationalize the offers by the Government of Nigeria for allocation of sweet crude and LNG at the earliest. Speaking on behalf of ONGC Group of Companies and representing the intent of Mittal Investment Sarl, the promoters of OMEL, Mr. Raha stated that OMEL stands committed in fulfilling all the obligations to the Government of Nigeria in good faith, and with best-in-class technology and skills", Oil & Natural Gas Chairman Subir Raha said.

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