ONGC Mittal Lands Nigerian Deal

ONGC Mittal has entered into an MoU with the Ministry of Petroleum Resources, on behalf of the Federal Republic of Nigeria, in Abuja on November 10, 2005, in the presence of an Indian delegation of Public Sector Enterprises led by Mr. Talmiz Ahmed, Addl. Secretary, Ministry of Petroleum & NG, Government of India.

The MoU envisages several projects to address the imperatives of the Government of Nigeria as well as to meet India's surging energy requirements, in a mutually beneficial manner within the context of strategic economic cooperation between Nigeria and India.

The essence of the MoU is production of an average 650,000 barrels/day Oil + Oil equivalent Gas (O+OEG) per day (equivalent to 32.5 million metric tons per year) over 25 years by OMEL from the deepwater exploration blocks to be allocated by Nigerian Government.

The Government of Nigeria expressed willingness to also offer to OMEL the lifting rights of 120,000 bbl/day of Nigerian crude oil on commercial basis; this includes 40,000 bbl/day now being lifted by Indian refineries.

The Government of Nigeria further offered an assurance of substantial LNG off-take out of the Government's share of gas.

Responding to the expectations of the Government of Nigeria, OMEL has proposed to build an export-oriented refinery of 180,000 barrels/day capacity based on Nigerian crude, subject to technical and financial viability. OMEL has also offered to invest USD 6 Billion in Nigeria on 2000 MW Coal and/or gas-based power plants, railway systems and capacity-building. OMEL will also facilitate upgradation of the Petroleum Training Institute (PTI), Effurun, Delta State. These investments by OMEL will be calibrated to the average sourcing of Oil & Gas from the two good quality deepwater exploration blocks to be selected and operated by OMEL on the basis of Production Sharing Contracts.

Joint Working Groups will now be tasked to develop definitive agreements and corresponding action plans for each of the component projects. ONGC Mittal Energy Services Ltd. (OMESL) will be developing the required trading, shipping and terminalling facilities.

OMEL is a joint-venture between ONGC Videsh Ltd (OVL), India's biggest Multinational Corporate and a wholly-owned subsidiary of Oil and Natural Gas Corporation (ONGC) Ltd., India's Most Valuable Company, and Mittal Investment Sarl, the controlling shareholder of Mittal Steel Company, the world's largest and most global steel company. OMEL, incorporated in the Republic of Cyprus, is focused on overseas Oil & Gas business, especially acquisition of Oil & Gas equity. OMESL is a joint-venture of ONGC Ltd. and Mittal Investment Sarl, focused on shipping and trading of hydrocarbons.

Speaking on the occasion, Mr. Subir Raha, Chairman, OMEL gratefully recognized the contribution of H.E. Dr. Edmund Daukoru, Minister of State for Petroleum Resources, under the guidance of H.E. Mr. Olusegun Obasanjo, President of the Federal Republic of Nigeria, in developing this remarkable cooperation to mutual benefit of Nigeria and India. Mr. Raha also acknowledged the initiative taken by Mr. L N Mittal, partner, in developing the transaction.

Mr. Raha added that depending on the geo-scientific parameters of the deepwater exploration blocks to be selected, it should be possible to commence the deliveries under the 650,000 barrels/day transaction in 5 to 7 years time. In the meantime, actions are being taken to operationalize the offers by the Government of Nigeria for allocation of sweet crude and LNG at the earliest. Speaking on behalf of ONGC Group of Companies and representing the intent of Mittal Investment Sarl, the promoters of OMEL, Mr. Raha stated that OMEL stands committed in fulfilling all the obligations to the Government of Nigeria in good faith, and with best-in-class technology and skills.