ONGC Mittal Energy, a joint venture between ONGC Videsh and Mittal Investment Sarl, has reportedly told the Nigerian government that it would explore the
OPL-285 oil and gas block only if it is waived of the attendant investment commitment.
It may be recalled that the joint venture firm secured exploration rights in OPL-279 and OPL-285 blocks in 2005 by agreeing to invest in downstream activities.
According to the agreement, the joint venture was 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 West of Nigeria.
But at the end of the first phase last year, OMEL abandoned one of the blocks (OPL 279) while in another, OPL 285, it is willing to go ahead only if the Nigerian government would waive the requirement to set up attendant downstream facilities, reports suggest.
The joint venture firm paid a signature bonus of $50 million for OPL-285 and $75 million for OPL-279.
The firm found only sub-optimal quantities of hydrocarbons in both the blocks during the initial exploration phase and OMEL is reluctant to enter Phase-II as downstream investments attached to it impose unsustainable financial burdens.
According to a study conducted by Foster Wheeler on behalf of OMEL, the downstream commitment has been found to provide a negative return.
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