Nigeria cancels award of oil blocks to Indian firms

New Delhi, July 7 : The Nigerian federal Government has cancelled the award of Oil blocks to two Indian companies Essar Exploration and Production Ltd and Sterling Global Resources Ltd, a media report today said.

Nigeria’s This Day newspaper reported that the federal government has reversed the award of three oil blocks — Oil Prospecting Leases (OPLs) 226, 2005 and 2006 to the two Indian firms, which were awarded at the bidding round held in May last year.

The report said leases were withdrawn after both companies failed to meet the pre-qualification requirements to participate in the bid.

"In a letter written by the Permanent Secretary of the Ministry of Energy (Petroleum), Sadiq Mahmood, last Monday, the letter conveyed the governments withdrawal of the award of the oil licences on the grounds that neither of the firms had met the pre-qualification requirements to participate in the 2007 bid round, nor formally bid for the blocks which were offered them," the newspaper said. Essar spokesperson could not be immediately contacted for comments. 'This Day' pointed out that the cancellation of the oil blocks is said to be causing ripples in the oil industry with the Indian firms preparing to challenge the decision by the ministry in court.

"Both firms are also said to be concerned that they had committed a total of 54 million dollars to the three blocks over a year ago and have been paying charges to banks and their financiers during the entire period. There are now questions over whether the federal government will pay compensation, including interest and damages that may accrue from a law suit," the report said.

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