Nigerian company files suit to prevent block reallocation

The Nigerian federal government�s offer of 22 oil blocks for international competitive tender suffered yet another setback last week when indigenous company Oil & Gas Nigeria Ltd. (OGN) brought suit to restrain the government from reallocating one of the deep offshore acreages. OGN wants to protect its holding in Oil Prospecting Lease 249. Details of the OGN suit are still not clear, but operators believe it might be an attempt to thwart the current bidding round.


LAGOS�The Nigerian federal government�s offer of 22 oil blocks for international competitive tender suffered yet another setback last week when indigenous company Oil & Gas Nigeria Ltd. (OGN) brought suit to restrain the government from reallocating one of the deep offshore acreages. OGN wants to protect its holding in Oil Prospecting Lease 249.

Thirty-one Nigerian exploration licenses were revoked in March in a cleanup exercise to revamp the domestic oil sector. Sixteen licenses were lost last July in a similar exercise (OGJ, Mar. 6, 2000, p. 36). The government claims most of those companies failed to fulfill all the requirements of the lease agreement. Many of the revoked leases are up for offer in Nigeria's current licensing round.

Details of the OGN suit are still not clear, but operators believe it might be an attempt to thwart the current bidding round.

Industry officials say OGN, along with its partner Texaco Inc., was the only company that fully complied with the terms of the license award before the expiration of the time limit. Specifically, while some companies have paid both the application and bidding fees, OGN also paid the signature bonus of $20 million, as required by the allocation letter. The block affected, OPL 249, is believed to be one of the four most-sought-after in the pack.

News of the OGN suit emerged while a federal high court in Abuja was hearing the case of another indigenous company�North-South Petroleum Nigeria Ltd.�that is seeking an injunction to bar the government from reallocating another block on the offer list, OPL 326. This was one of the July 1999 revocations. Another federal court, also in Abuja, is hearing a similar suit brought by Zebra Energy Ltd. against a decision to withdraw its leasehold on deep offshore block OPL 248.

In the North-South Petroleum case, the law firm G.C. Ohen & Co. filed an affidavit claiming that, among other things, North-South paid the application and bidding fees and was granted the allocation on May 13, 1999. On July 6, 1999, however, the government made an announcement purporting to cancel this allocation and 15 others.

North-South claims it would lose at least $2 billion if Nigeria reallocates the block.

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