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Thursday, October 5, 2006
Shortly after a court order dismissed the claims made by South Atlantic Petroleum Company that the government had illegally revoked its license for OPL 297, the government auctioned it off. The Federal High Court in Lagos on October 4 lifted the injunction on the block which cleared the way for the government to move forward with the auction.
India’s ONGC Mittal Steel submitted the winning bid with an offer of $100 million. Unfortunately for the Indian company it was not immediately able to produce the 25% deposit on the block. According to Department of Petroleum Resources Director Tony Chukwueke, the company will have until 5:30 pm on October 6 to come up with the deposit.
If the Indian firm does not produce the funds on time one of the other bidders will be eligible to win the block. Companies that put in bids for the block include BG/Sahara with an offer of $67 million and INC Natural Resources with an offer of $50.5 million. According to DPR regulations, INC Natural Resources has the inside track and has the right of first refusal because of its planned investment in ethanol in Jigawa State. The two companies have agreed to increase their stakes and meet the deposit requirements if ONGC Mittal fails to meet the deadline.
OPL 297 (formerly OPL 246) has been drenched in controversy since the government’s decision to take the block away from South Atlantic. According to the DPR boss, the decision of government to auction off the block was based on its desire to conclude the 2006 bid round which was launched in May.
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