Nigerian court says revocation of South Korea oil deal is illegal

Nigeria’s high court has ruled that its country’s government illegally revoked exploration licences granted to a South Korean oil consortium.

The Korea National Oil Corporation (KNOC) had filed an action demanding the restoration of two offshore licences, granted in 2005.

Nigeria called off the deal in January, alleging that the consortium failed to make agreed payments.

But the court said that President Umaru Yar’Adua did not have such power.

The government has said it will appeal against the court’s ruling.

Former President Olusegun Obasanjo had awarded KNOC rights to the two oil blocks, which which some estimates suggest could hold as much as one billion barrels.

The case has been watched closely by the oil industry, with foreign investors concerned about the security of contracts when administrations change.

Infrastructure pledge

The revocation of the licences – which were later awarded to an Indian firm – were a blow to Seoul’s efforts to raise its reserves, as South Korea imports all its oil.

The consortium is led by KNOC. Other members include Daewoo Shipbuilding and Korea Electric Power.

It paid $9m in cash and offered a letter of credit to pay another $231m, in order to cover its 60% interest in oil blocks OPL321 and OPL323, which are based in deep water in the Gulf of Guinea.

In return for the exploration rights, South Korea had planned to build a 1,200-km (745-mile) gas pipeline from the southern delta to the capital, Abuja, and provide 2,250 megawatts of power generation.

Source: BBC

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