[ASIA] French oil major Total has announced its decision to partner ONGC Mittal Energy (OMEL)

French oil major Total has announced its decision to partner ONGC Mittal Energy (OMEL) by picking up stakes in two deepwater oil explorations blocks in Nigeria. While Total will acquire a 25.67% stake in deep offshore block OPL 285, the company will take another 14.5% slice in OPL 279. OMEL, a joint venture between ONGC and LN Mittal group, will remain the operator for the two blocks.

The Nigerian national oil company EMO Exploration and Production Ltd is also a partner for both the blocks. At present, OMEL holds 60% participating interest in OPL-279 while balance 40% interest is held by EMO. In the block OPL-285, OMEL holds a 90% stake and the rest is held by EMO. OMEL will divest a part of its holding in these two blocks in favour of Total. The Nigerian blocks were the first oil acerages to be acquired by OMEL.

“The necessary approvals have been obtained from the Nigerian authorities,” Total said in a statement on Tuesday. Financial details were not disclosed. ET had first reported the deal on April 15, 2008.

An OMEL source, on conditions of anonymity, said, the deal is based on reciprocity. “Total would also offer equity stakes to OMEL in its oil & gas assets in other countries,” he said. Explaining the significance of the deal, the official said Total has the expertise in undertaking exploration and production (E&P) activities in that part of the world (Nigerian deepwaters). The tieup with Total would also help the consortium get scarce equipment such as drilling rigs, he added.

The two blocks have the potential of high oil and gas reserves. OPL 285, located near the Bonga field in 400-900 metres depth, covers an area of around 1,170 square kilometers. The other block, OPL 279, (1,125 square kilometres) is located near the Ehra and Bosi fields in water depths ranging from 800 to 1,800 meters.

“The production sharing contract (PSC) for both the blocks were signed on February 23, 2007 and OMEL intended to farm out a portion of participating interest to an international oil company,” the OMEL official said. Blocks were awarded to OMEL under a ‘mini bid round’ in 2006 where commitment to build infrastructure had been one of the pre-qualification criteria. The consortium had committed to build a refinery in Nigeria to bag the deal.

OMEL, a joint venture company incorporated in Cyprus, has two major partners — ONGC Videsh and Mittal Investments Sarl (MIS). OVL and MIS holds 49.98% and 48.02% shares of OMEL, respectively, while 2% is held by SBI Capital.

Source: India Economic Times

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