India today authorized OVL to provide funding support to ONGC Mittal Energy Limited (OMEL) for OVL’s share of expenditure of USD 195 million for Block OPL 279and USD 164 million for Block OPL 285 in Nigeria as per work programme and budgeted estimates for the first exploration phase, inclusive of signature bonus and acquisition cost. The entire requirements of OVL’s share of investment in the project would be met by OVL from its own resources and/or by borrowings from domestic/international market, without any budgetary support from Government of India.

Incorporating the committed work programme, a budget for OPL 279 and OPL 285, for the first exploration phase of 5 years (2007-2012) has been prepared by OMEL and the expenditure estimated is ISD 389 million for OPL 279 and USD 399 million for OPL 285. OVL’s share of total estimated expenditure in case of OPL 279 inclusive of the payment of signature Bonus, Work Commitment in first exploration period and acquisition of additional participating interest is expected to be USD 195 million. In case of OPL 285, the total estimated share of OVL’s expenditure inclusive of the payment of Signature Bonus, Work Commitment in first exploration period is expected to be about USD 164 million.

The investment will give opportunity to ONGC Videsh Limited (OVL) to increase its reserve accretion of hydrocarbons, thereby increasing the energy security of the Country. Increased energy security could contribute to better formulation of policy of inclusiveness in the supply chain in the downstream sector.

OPL 279 and OPL 285 are deep water exploration blocks located in Gulf of Guinea, Nigeria. While the Block OPL 279 has an area of about 1,125 sq km with a water depth ranging between 800m-1800m, the Block OPL 285 has an area of about 1,167 sq km with a depth ranging between 400m-900m.

Pursuant to a joint venture agreement dated 11th October 2005, OVL along with Mittal Investments Sarl (MIS) promoted a joint venture company named ONGC Mittal Energy Limited (OMEL) incorporated in Cyprus to conduct Hydrocarbon Business of exploration and production of Oil and Gas. In the 2006 mini-Bid round in Nigeria, OMEL emerged winner on 19th May 2006, for Exploration Block OPL 285 by bidding mandatory minimum signature bonus of USD 50 million and own Block OPL 279 by matching the winning bid of USD 65 million or Rs.300 crore, whichever is less. OMEL joined hands with a local partner Emo Exploration and Production (EMO) and later brought French company TOTAL as a partner. OMEL and TOTAL have to carry EMO till the “First Oil”. The final Participating Interests (PI) of OMEL Subsidiary in the blocks are as follows: In OPL 279 PI of 45.50% and Working Interest (WI) of 75.83% while in Block OPL 285 PI would be 64.33% and WI would be 71.48%. The Working Interest represents the paying interest inclusive of carry of local partner’s share.