ONGC Videsh Ltd, the overseas arm of state-run explorer Oil and Natural Gas Corp (ONGC), will get back two highly prospective deep-water oil blocks in Nigeria, which were snapped up by the Nigerian government and awarded to a consortium led by Korean National Oil Corp (KNOC).

ONGC Videsh had, in August 2005, won offshore blocks 321 and 323 in Nigeria, which have in-place reserves of two billion barrels each.

While OVL committed $485 million in signing amount, the Nigerian government signed the production sharing contract for the two blocks with the KNOC consortium, saying the Korean firm had the first right of refusal.

The consortium paid $92 million in cash and offered a letter of credit to pay an additional $231 million as production share to the Nigerian government to cover a 60 per cent interest in blocks OPL321 and OPL323, forcing Nigerian president to cancel the allocation.

South Korea has a 60 per cent stake, with British company Equator owning 30 per cent and a Nigerian firm the remaining 10 per cent, in the product-sharing deal.

Nigeria's energy ministry wrote to OVL on 6 January saying the two blocks would be restored to the company if it paid the $485-million signature bonus in full within 60 days, an official said, adding, OVL was evaluating the offer and would respond before 6 March.

A statement issued by the KNOC consortium also said the Nigerian government served notice on it to revoke the award of OPL 321 and OPL 323 over its failure to effect full payment for the rights to the oil blocks.

The KNOC consortium said it had met its obligations through official negotiations with the Nigerian government and the payment issue has never been raised in the previous government.

''We are seeking various counter-measures including legal steps and diplomatic solutions to restore the rights or get refunded,'' it added.

Checks with Nigeria's department of petroleum resources (DPR) indicated that the oil blocks could hold as much as  one billion barrels of oil.

Nigerian oil ministry officials, however, said the government had not revoked the Korean group's rights to the oil blocks and added the issue was complex.

OVL, UK-based Equator Exploration and Nigerian company Owel E&P Ltd in 2005 had made the winning offer of about $175 million signature bonus for block 321 and $310 million for 323. But KNOC exercised a right of first refusal, which it had got in lieu of downstream investment commitments.

Nigeria awarded 60 per cent stake in the two blocks to KNOC and gave a 30 per cent interest to OVL and its partners. The remaining 10 per cent was awarded to local companies.

OVL refused the offer and the 30 per cent share in the Gulf of Guinea blocks was taken by Equator, the official said.

The ONGC board, meanwhile, has approved the second phase of Mumbai High North (MHN) redevelopment project, which will yield an incremental crude oil production of 17.354 million metric tonnes (MMT) and 2.987 billion cubic metres (BCM) of natural gas, aggregating to 20.34 million tonnes of oil equivalent, by March 2030. 
 
The total cost of this redevelopment project is around Rs7,135 crore. The project is scheduled to be completed by September 2012. 
 
The phase II of Mumbai High North redevelopment aims to further improve recovery from Mumbai High, with fresh inputs like drilling 73 new wells and side-tracking of 38 sick/poor producers.