Lakshmi Mittal JV with ONGC to sign PSC in Caribbean

Vol 11, PW 23 (15 May 08) People & Policy

Those who doubted OMEL may have to think again.

ONGC Mittal Energy, the joint venture between UK-based steel-baron Lakshmi Mittal and ONGC, is to sign a new PSC in the Caribbean, while enlarging its holdings in Africa. PETROWATCH learns OMEL is negotiating with Trinidad and Tobago’s Ministry of Energy and Industries for the 1019-sq km offshore block NCMA-2.

“Right now, the PSC is at a draft stage,â€‌ says an industry source. “It will be sent to the parliament of Trinidad and Tobago after it is finalised by both parties.

They are expected to ratify it in two months time.â€‌ Exploration block NCMA-2 was offered by the Trinidad government in January 2006 when it invited bids for eight onshore and three shallow water blocks.

In April this year OMEL won the block over Centrica of the UK with its $204m work programme of which $30m has been paid as a signature bonus to the Trinidad government. Details of the work programme have not yet been revealed.

In Nigeria, meanwhile, PETROWATCH learns OMEL is confident it can sign a PSC for deepwater block OPL-297, its third in the country, despite ongoing litigation. “The block has already been awarded to OMEL,â€‌ says an industry source.

“There is some dispute with the previous operator. Once that is settled they will sign a PSC.

â€‌ In Nigeria, OMEL has already been awarded exploration blocks OPL-279 and OPL-285. When finalised, the new deal for OPL-297 will substantially increase the company’s investments in Africa and is likely to confound industry cynics.

OMEL has already budgeted $200m each for OPL-279 and OPL-285 blocks, and has paid the Nigerians 25% of its $100m signature bonus for block OPL-297. “OMEL has lined up big investments,â€‌ reports a source.

“$265m has already been paid to Nigerian authorities only as a signature bonus for these three deepwater blocks. Whoever says the company is going nowhere is wrong.

You can’t create a company like ExxonMobil overnight. If OMEL strikes oil in these Nigerian blocks, it will make billions of dollars.