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May 19, 2007 12:00 IST
Essar Energy Holdings, a part of the Essar group, has acquired an oil and gas exploration block in Nigeria in the latest round of bidding. The shallow offshore block is completely owned by Essar Energy.
"The recoverable reserves in the block are in excess of 75 million barrels of crude oil. We are now waiting to sign the contract with the Nigerian government," a senior official in the Essar group said.
Nigeria auctioned 45 oil blocks on May 11 in a last-minute sale of oil acreage before outgoing President Olusegun Obasanjo hands over power to Umaru Yar'Adua, his successor, on May 29. Sixteen companies bid under the auction.
There were fears that the new government, once it takes over, would revoke the licences that the Obasanjo would award. However, officials in Essar say there will not be any problem as the transition in the government is within the same ruling party. An Essar spokesperson said that Essar Energy had submitted a bid and was awaiting the outcome.
In the third such round of auction (the first round took place in 2005, since 2005) is expected to boost Nigeria's oil production beyond the current 4 million barrels a day after 2010. Nigeria is Africa's largest producer of crude oil and world's. In the last two rounds of bidding, a 10 per cent stake in all blocks had been reserved for local partners. But the
country says that in this round of auction this will be done away with.
The acquisition of the exploration block is also likely to fuel Essar's plans to buy stake in a oil refinery at Nigeria's Port Harcourt. Indian Oil Corporation, the Hindustan Petroleum Corporation-LN Mittal combine was also interested in the refinery provided they were offered an exploration block as well.
"Now that we have got the block we may consider pursing the refinery stake," the Essar official said.
The Essar group owns oil and gas exploration blocks in Mauritius and Madagascar, besides blocks in India.
In the last round of auction under NELP the group won two blocks, both in Assam.
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