Yar’adua Gov’t, Koreans raise White Flag; poised to reach deal on oil concessions
There are growing indications that the ongoing tug-of-war between the Nigerian government and South Korea's Korea National Oil Corporation (KNOC) is headed for closure after secret behind the scene negotiations found middle ground between the warring parties, Huhuonline.com has learnt from close presidential sources privy to the negotiations.
The move opens the way for KNOC to regain control of two oil blocks – OPL 321 and OL 323 whose licenses had been withdrawn by the Yar'adua government. Early this year, the Yar'adua government withdrew the two concessions, accusing KNOC of failing to honor the contractual obligations it made in 2005 to former president Olusegun Obasanjo to invest in Nigeria.
Miffed, the South Koreans went to court to seek redress, and in late August, a Federal High Court ruled that the withdrawal of the offshore licenses was illegal. The Yar'adua government Abuja appealed against the ruling in October, precipitating a legal fracas that seems to have now been resolved, thanks to the intervention of Britain's Equator Exploration, joint owner of the two oil block with the KNOC. OPL 312 and 323 are said to be potentially rich in gas.
Sources told Huhuonline.com that Equator Exploration owns 30% of OPL 321 and 323 and, unlike KNOC, fully paid its front-end bonus on signing for the two blocks. Equator Exploration reportedly coughed out $ 53.9 million to the Nigerian government whereas KNOC came up with only a small part of the money, the remainder was to be paid out in kind by the construction of a 2,000 megawatt power station as well as a gas pipeline that was designed to link Ajaokuta in Kogi state to Abuja.
The dispute between KNOC and the Nigerian government for control of the OPL 321 and 323 offshore licenses froze all work on the two blocks so Equator Exploration had no revenue to show for the payment of its bonus. The British group thus had every interest in a settlement of the dispute between the Nigerian government and its South Korean partners.
In a tactical quid pro quo move, Equator Exploration appointed two Nigerian businessmen with strong political connections in Abuja to its board. They are Wale Tinubu, chief executive of the Oando oil group and Ommofe Boyo, number two man at Oando. Backed by the Nigerian go-betweens, South Korea's KNOC, offered to negotiate an amicable settlement and sent one of its top executives, Cho Il-kwon, to Abuja early this month to finalize the deal.
In a related development, RoyalDutch/Shell's EA field began pumping again on November 8 after a three year stoppage because of instability in the Southern Niger Delta region. The EA field, operated by the Sea Eagle Floating Production Storage Vessel, was shut down for three years due to security concerns over militant attacks, but was shut down again in September when a problem occurred with the emergency shut down valve.
Its output is being stored on the FPSO Sea Eagle which has been reactivated for the occasion. The field has a production capacity of around 115,000 bpd but several weeks will be needed before it reaches its peak production phase. EA is situated on one of five concessions on which the Department of Petroleum Resources didn't renew Shell's property rights last year with Oando staking a claim. The conflict between the Anglo-Dutch giant and the Nigerian government hasn't yet been resolved.