Nigeria Minister: Defaulting Block Winners to Lose Rights

LAGOS, Feb 09, 2006 (Dow Jones Commodities News via Comtex)

Winners of oil blocks during Nigeria's 2005 licensing round who failed to pay their signature bonuses by the end of last year will have their blocks withdrawn, Edmund Daukoru, Minister of State for Petroleum, said in Abuja on Wednesday.

Those who made partial payments for their blocks would also have their money refunded, the minister added, as he spoke at a press conference in Abuja, to announce the conclusion of the licensing round.

"The decision has been taken to honor only those winners that paid their signature bonus in full," Daukoru explained.

He said those blocks that weren't sold and those to be withdrawn from defaulters would be put up for sale again in this year's licensing round, scheduled to be held before the end of 2006.

This year's licensing round, Daukoru said, put a high premium on "a well fashioned out work program and commitment to get the first oil on schedule."

Daukoru said the Nigerian government had received more than $1 billion from signature bonuses paid by winners for 25 blocks. Nigeria offered 75 blocks last August, but only 44 blocks were awarded, while payment was made for only 25.

A senior government official had announced last week that the government had so far received $1.2 billion from the signature bonuses paid by winners.

Commenting on blocks 321 and 323, the award of which has received criticism from bidders, Daukoru said bidders knew that there was a right of first refusal tied to the blocks for the Korean National Oil and Gas Company, or KNOC.

Daukoru said President Olusegun Obasanjo permitted the right of first refusal to the Koreans after they had promised to set up a number of downstream projects in the country.

"There is not a timeline attached to these blocks given the pledge of downstream projects by the KNOC," Daukoru said.

Copyright (c) 2006 Dow Jones & Company, Inc.

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