http://www.thisdayonline.com/nview.php?id=134304The Federal Government has cancelled an oil exploration deal it signed with a Korean Consortium, according to separate statements issued yesterday by the companies that formed the group.
This development came on the day the Secretary-General of the Organisation of Petroleum Exporting Cou-ntries (OPEC), Mr. Abdalla Salem El Badri, said a price range of $60 to $80 per barrel is “ideal” for crude oil,
The Korean consortium is now exploring legal option against the Federal Gover-nment over the cancellation of its exploration rights at two major offshore oilfields awarded to the consortium in 2005.
Korean National Oil Company (KNOC), a member of the consortium, said the Federal Government alleged that the consortium failed to make agreed payments.
But the group, led by KNOC, said they had paid $9 million in cash and offered a letter of credit to pay an additional $231 million to cover their 60 per cent interest in Oil Prospecting Licence (OPL) 321 and OPL 323.
The blocks could hold as much as 1 billion barrels, according to preliminary estimates.
“Nigeria informed our consortium that it will cancel the rights because the consortium failed to fully pay the investment that the group had agreed to honour in 2005 when the rights were awarded,” consortium members Daewoo Shipbuilding and Korea Electric Power Corporation said in a statement.
“We have met our obligations through official negotiations with the Nigerian government and can't understand the decision because the payment issue, which has never been raised in the previous government, suddenly became a matter under the current government,” KNOC also said in a statement.
“We are seeking various counter-measures including legal steps and diplomatic solutions to restore the rights or get refunded,” the statement added.
The cancellation of the rights is a gain for India’s top energy explorer, Oil and Natural Gas Corp (ONGC), as the Federal Government restored its right as the winning bidder for the two highly prospective deep-water oil exploration rights in the Gulf of Guinea.
ONGC lost out to the Korean consortium in 2005 as South Korea promised the Federal Government massive investment in infrastructure.
South Korea promised to build a 1,200-km (745-mile) gas pipeline from Port Harcourt to Abuja and 2,250 megawatts of power generation in return for the exploration rights.
The two oil fields oil are also 30 per cent owned by British-listed firm Equator Exploration and 10 per cent by a local Nigerian firm.
Equator said earlier last week that it had been also informed of the decision to restore the status of the ONGC consortium as the winning bidder, subject to their payment in full of a $485 million signature bonus within 60 days of Jan. 6, 2009.
Yesterday at the World Economic Forum Annual Meeting holding in Davos, Switzerland, the Secretary-General of OPEC hinted that OPEC would make further production cuts at its March 15 meeting in a renewed bid to shore up the price
OPEC’s argument for higher crude oil prices was supported by the Group Chief Executive of British Petroleum, Dr. Tony Hay-ward.
Oil currently hovers around $40 a barrel after hitting a record $147 June last year, putting the economies of many oil-producing countries at risk, with Nigeria’s 2009 budget in jeopardy because of the $45 benchmark. Oil revenues account for around 80 per cent of Nigeria’s income and 95 per cent of foreign exchange earnings.
“We are not happy with even $50 [a barrel] oil,” said El Badri. “We don’t want a repeat of the 1980s when we didn’t invest, had to lay off high-skilled people, didn’t invest in new capacity. We have to be ready to meet rising demand. The most important thing is the ability to invest through the downturn.”
El Badri argued that the current price would hurt oil producers and at the same time hurt investment, adding: “If we don't invest now, then we will store up a problem in three years from now when your demand picks up.”
He said a similar crisis in the early 1980s prevented investment and led to shortages when the global economy eventually recovered.
The BP boss agreed with him, saying the price of oil “has to be high enough to motivate investment going forward. When the economy picks up, demand will pick up very fast and we will quickly run into supply problems. We do need a price that allows us to continue to invest in the downturn.”
The Chief Executive of French energy giant EDF, Mr. Pierre Gadonneix, agreed with the proposed price range, but said investments would have to be made with or without the economic downturn.
Can somebody please find out if the guys refused to pay an agreed bribe? |
