A Nigerian court in the capital, Abuja, upheld an application by Korean National Oil Corp. to nullify a government decision to cancel the company’s oil- exploration rights.
The decision to void the licenses awarded to the company was illegal, unlawful, wrong and “procedurally unfair,” Federal High Court Judge Abdullahi Mustapha said today. Mustapha ordered the Nigerian government to refrain from interfering in Knoc’s affairs with regards to the oil licenses.
The Korean company filed the suit after President Umaru Yar’Adua’s government in January voided its rights in licenses 321 and 323. The government said the company failed to pay a $485 million signing bonus. The licenses were re-assigned to ONGC Videsh Ltd. of India, a joint defendant in the lawsuit represented by the Alex Izinyon law firm.
“It strengthens the perception of the rule of law” in the west African country, said Sebastian Spio-Garbrah, Middle East and Africa analyst at Eurasia Group, a New York-based research company, in a telephone interview. “The bigger story out of this is that the Nigerian judiciary is independent.”
Nigeria, Africa’s most populous country, has reserves of more than 36 billion barrels of crude and 187 trillion cubic feet of gas, according to the country’s Petroleum Ministry. The government has in recent years encouraged investments from Asian oil companies tied to projects in refining and development of infrastructure.
Nigeria vies with Angola as Africa’s biggest oil producer and is the fifth-biggest source of U.S. oil imports.
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