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South Korea Beats India to Nigeria's Blocs 321 & 323(Vanguard (Nigeria) Via Thomson Dialog NewsEdge)SOUTH Korea, the world's fifth largest oil importer has beaten India's Oil and Natural Gas Corporation (ONGC) to control of Nigeria's oil blocs 321 and 323 after months of horse trading and media speculation about the outcome. The South Koreans have also pledged an investment package of $6 billion (about N768 billion) over the next few years. Resources, said yesterday by phone from Abuja. India's Oil & Natural Gas Corp. withdrew from the venture, ending a six_month ownership dispute. Competition for reserves among Asia's state_run oil producers is intensifying after prices rose to records because demand in Asia and the U.S. outpaced supply growth. Since August, India has lost to Chinese government_run companies in bids to acquire assets worth about $7.9 billion in Kazakhstan, Ecuador and Nigeria. "Everybody is trying to secure their own resources instead of being dependent on somebody else," said Fadel Gheit, senior energy analyst with Oppenheimer & Co. in New York. "All these government_owned companies or government agencies are emerging from the bureaucracy and the state's shadow." South Korea's victory in Nigeria was India's fourth defeat in a year in bidding for overseas reserves. South Korea, which imports almost all of its oil, has increased consumption 91_fold in four decades to 2.28 million barrels a day in 2004. In January, the top seven suppliers to Asia's third_biggest economy were all from the Middle East, led by Saudi Arabia. Oil from Nigeria, the sixth_biggest producer in the Organization of Petroleum Exporting Countries, is prized by refiners for the amount of high_value gasoline it yields. Fields available for investment are diminishing at a time when oil demand is rising, especially in countries such as China, India and South Korea, said Mark Routt, an oil analyst at Energy Security Analysis Inc. in Wakefield, Massachusetts. The list of alternatives that the state_run companies "get to choose from are only blocks and resources that are not state preserves," Routt said in a phone interview. Oil & Natural Gas, which had sought a 90 percent stake, turned down an offer of a 30 percent stake in the venture. Equator Exploration Ltd., based in Tortola in the British Virgin Islands, received a 30 percent stake and a local Nigerian partner won 10 percent, Chukwueke said. The agreement will be announced officially today. Oil & Natural Gas "was looking for operatorship," said Praveen Martis, an energy analyst at U.K._based Wood Mackenzie Consultants Ltd. "They probably don't want to be there as a junior partner." Ownership of the Nigerian areas has been disputed since Oil & Natural Gas initially offered the highest so_called signature bonus, or fees paid to the government on signing drilling contracts, of $175 million for Block 321 and $310 million for Block 323 in August 2005. A South Korean group led by Korea National pre_empted Oil & Natural Gas's offer by pledging investments in Nigeria. The group plans to build two 2.25 million_kilowatt gas_fired power plants and a 1,200_kilometer gas pipeline, South Korea's Ministry of Commerce, Industry and Energy said in a statement today. The investments will account for 20 percent of Nigeria's electricity supply by 2010, it said. The pledge to build the power plants prompted Nigeria to cut the signature bonus Korea has to pay to $90 million from $320 million, the ministry said. Of the South Korean companies' share of the project Korea National has 75 percent, Korea Electric Power Corp. 15 percent and Daewoo Shipbuilding & Marine Engineering Co. 10 percent. In November, Oil & Natural Gas and a partner, billionaire steelmaker Lakshmi Mittal, also offered to spend $6 billion on refining and power plants in Nigeria. India may still win stakes in Nigeria's deepwater fields if the Nigeria government grants the Southeast Asian nation preferential treatment, the same terms Korea received last year, for two deepwater blocks in this year's bidding round, Chukwueke said. "You win some, you lose some," said S. Raghu Raman, energy adviser at the Confederation of Indian Industry, the nation's largest industry body. "There are many companies competing for assets. This is not the end of the road for ONGC," as the Indian company is known. President Roh Moo Hyun of South Korea met his Nigerian counterpart Olusegun Obasanjo in Abuja to attend the signing of the oil drilling agreement yesterday. On March 6, Roh began an eight_day trip to Egypt, Nigeria and Algeria. In August, China National Petroleum Corp. beat India by agreeing to pay $4.18 billion for PetroKazakhstan Inc. The Chinese company in September outbid India's Oil & Natural Gas Corp. in buying assets of EnCana Corp. in Ecuador for $1.42 billion. In January, CNOOC Ltd., China's third_largest oil company, bought a Nigerian oil field stake for $2.27 billion after India's government barred Oil & Natural Gas from acquiring the stake because of a lack of disclosure on ownership. CNOOC bought the stake in the OML 130 oil area, also known as the Akpo field, from South Atlantic Petroleum Ltd. Korean National Oil Corporation and Equator Exploration Limited, the operators of the blocks paid the required Signature Bonus at the ceremony. The two countries also singed three Memorandum of Understanding (MoU) on Gas and Solid Mineral development. The Korean are expected among other things, to lay over 1000 km gas pipelines, refurbish some Nigerian rail lines and build a gas powered electricity plant of 2250 kilowatt capacity. Speaking at the venue of the ceremony, the Nigerian Minister of State for Petroleum Dr. Edmund Daukoru, said that both countries have complementary endowments that can be harnessed for their good. "Nigeria is heavily endowed with natural and human resources", he said. "and South Korea has technology, Skill and Finance", he said, "I am happy that we have agreed to harmonise these resources for the benefit of our people". Daukoru, said that the signing of the Production Sharing Contract (PSC) which was concluded yesterday, is an expression of government sincerity and seriousness about the cooperation it has sought from the South Koreans "We have fulfilled our aspect of the deal", he told his guest, "it is your turn to honour your own", he said. In his response, the South Korean Minister of Commerce, Industry and Energy, Mr. Sye Kyun Chung, expressed his joy with the bilateral relationship between his country and Nigeria. "The MoU on Energy and Mineral resources cooperation and the PSC signed between our two countries", he noted, "are excellent examples of bilateral cooperation that would contribute to Korea's energy supply and security and Nigeria's diversification of oil development". Fielding questions from Journalists later, Mr. Chung said that Korea is allowed a grace of one and half years to start the implementation of the agreement, saying that his country would want to start the Project as soon as possible. Shedding more light on the projects, Dr. Daukoru told the press that the 1025km Gas Pipeline that form part of the project would start from the Northern fringe of the Niger Delta to Abuja, then to Kaduna. "The Rail line is supposed to be cross connection between the North-South, the Western end of the existing system and Eastern length of the existing system," he explained. The three MoUs signed were: the Nigerian National Petroleum Corporation (NNPC) represented by the Group Managing Director (GMD) of the NNPC, Engr Funsho Kupolokun and Korean Gas Corporation which President, Mr. Soo ho Lee signed for it. The MoU is to explore gas cooperation. The second one was between Nigerian Mineral Resources and Geological Survey Agency (NMRGS) and Korean Resources Corporation. The Director General of NMRGS, Dr. Siyanbola Malomo signed for his Agency while Mr. Yang Soo Park stood for Korea. It is on mineral resources information exchange and joint exploration. The last one was, which centres on research and development of geo scientific knowledge signed by Dr. Malomo of the NMRGS and Dr. Tai Sup Lee, President of Korea Institute of Geosciences and Mineral Resources for their two organisations. It could be recalled that President Olusegun Obasanjo had initiated courtesy visits between the Ministers of Energy of both countries in April, 2005. In July 2005 and MoU integrating upstream investments to downstream projects was agreed and signed in July 2005, tagged Integrated Korean Project in Nigeria. Distributed by AllAfrica Global Media. (allafrica.com) |