ONGC acquires Danjuma''s oil block in Nigeria even as OPEC cuts output

Mumbai: Oil and Natural Gas Corporation (ONGC) has officially received the deepwater oil block OPL 246, after it paid $25m, representing the mandatory 25-per cent down payment for the block. ONGC Mittal Energy, a joint venture of the state-owned explorer and steel baron Laxmi Niwas Mittal won block OPL-246 by bidding $100 million, beating INC Natural Resources and BG-Sahara.

This block is the relinquished area of the billion-barrel Akpo oilfield of Sapetro, part-owned by former defence minister Theophilus Danjuma and is the second acquisition of ONGC Mittal Energy in Nigeria.

ONGC Mittal has already won two blocks — OPL-209 near ExxonMobil's Erha project and OPL-285 where Statoil has struck hydrocarbons.

The company has also won a third oil acreage, which was auctioned by government after revoking licence of Nigeria's South Atlantic Petroleum (Sapetro).

The present block fulfills the Nigerian government's promise of giving three fields to the joint venture as part of a composite deal envisaging huge investments by ONGC Mittal in building a refinery and power plant.

Member-countries of the Organisation of Petroleum Exporting Countries (OPEC), including Nigeria, meanwhile, agreed to reduce their crude oil production by one million barrels per day (bpd) with effect from November 1, 2006, in a bid to arrest declining oil prices in the international market.

Nigeria's minister of state for petroleum resources, Edmund Daukoru said that there was already a consensus among the 11 member countries of the OPEC to cut production from the group's officially agreed ceiling of 28 million bpd. Nigeria had announced a cur back of around 120,000 barrels of oil per day along with Venezuela's cut of 50,000 barrels.

Daukoru, who is also OPEC president, had indeed written to the member countries over the weekend, calling on them to cut their crude production by a collective one million bpd from November 1, after oil prices had nose-dived from all-time high of $78 per barrel to below $60 a barrel. The cut is expected to be pro-rated according to current percentage shares of the ceiling.