Nigerian Court Suspends Govt Sale of Two Oil Blocks

LAGOS May 10, 2007 (Dow Jones Newswires)

As the Nigerian government prepares to auction 45 oil blocks Friday, a Federal High Court has suspended the sale of two of the blocks pending the determination of a case on them, a media report says Thursday.

The affected blocks are oil mining leases 13 and 16, which the government withdrew from Shell Petroleum Development Company of Nigeria, a unit of Royal Dutch Shell PLC (RDSB), for its failure to develop the field for about 18 years.

Shell has sued the government over plans to re-award the blocks, but the government has countered by filing an objection to Shell's suit.

"The OMLs should not be sold until I give my ruling on the preliminary objection," The Punch newspaper quoted Justice Binta Murtala-Nyako of the Federal High Court, Abuja, as saying Wednesday.

Justice Murtala-Nyako said she would deliver her ruling on the government's objection on May 17. Until then, she said "the OMLs should remain in the custody of whoever presently."

The Punch report said the government had placed an advert in a daily newspaper asking prospective bidders to disregard the suit filed by Shell over the oil blocks.

Edmund Daukoru said in April that some of the oil blocks to be offered in the 2007 bid round were recovered from oil companies that had failed to develop such fields after the stipulated period.

Winners of blocks in Friday's auction are expected to pay 50% of the signature bonus they offer, while the balance must be paid before the signing of production-sharing contracts - in about two weeks' time.

The government has said the award of the blocks will be completed before May 29, when a new government will be inaugurated in Nigeria.

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