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LAGOS, May 18 (Reuters) Nigeria will auction 17 oil drilling licensing areas to buyers including Indian, Chinese and British companies in return for about $20 billion investment in refining, power and other projects, authorities said on Thursday.

The auction due to take place on Friday is unlikely to see much competitive bidding because the 10 qualified bidders have been given the right of first refusal over all 17 blocks, with a reserve price.

But industry interest is high because most of the licences are in deep water zones where billion-barrel discoveries have been made.

Major oil companies were forced to relinquish many of them under the terms of earlier licensing rounds.

''We have said that only those who commit to build refineries in Nigeria to stop us importing products would be qualified,'' Tony Chukwueke, director of the Department of Petroleum Resources, told Reuters, adding that he expected $500 million in bids to secure the licenses, on top of promised investments.

The government is also using the licensing to address civil unrest in the Niger Delta by reserving one block for a collection of ''youth groups'' -- a local term for militants -- who would reinvest any of their profits into local development.

''That is resource control,'' said Chukwueke, referring to the assignment of onshore block 233 to a new company called Niger Delta United Oil Co. in the states of Bayelsa and Delta.

Militant attacks on the oil industry in Delta state have cut Nigerian oil output by a quarter.

''It is targeted at youth emancipation. The state governments have a share but the controlling powers will be all these youths who create trouble, we are seeing if we can get them together.'' ''They will be asset owners and they have to bring in a reputable operator,'' he added.

INDIA, CHINA An Indian consortium made up of ONGC and Mittal Steel will have first right of refusal over three blocks, including part of block 209 where ExxonMobil discovered the giant Erha field.

In return, the consortium will commit to invest $6 billion in a new 180,000 barrel per day refinery, 2,000 megawatts of power and an east-west railway, Chukwueke said. Global Steel, also of India, has rights over block 281 in return for commitments to build a $1.8 billion compressed natural gas plant.

State-run China National Petroleum Corp has rights over four blocks in return for $2 billion investment in reconditioning the Kaduna refinery.

Nigerian Agip Oil Co, a unit of Italy's ENI, has kept rights to block 211, which it originally won a decade ago, in return for commitments to invest $600 million in power.

ONGC Videsh has part of block 218, where Statoil has discovered both oil and gas, as compensation for its loss of a share in two highly prospective blocks it lost due to a dispute with Korea in a licensing round last year.

BG Group and Sahara Energy have rights over the relinquished section of block 213, where Chevron found part of the giant Bonga southwest oilfield, in return for $2.5 billion invested in gas gathering.

Taiwanese CPC has rights over part of block 219, where Shell discovered the Bolia oilfield, in return for a power plant.

Chukwueke said he was hoping to avoid a repeat of last year's licensing round, where many bidders failed to pay up, by demanding a 25 percent down payment.

REUTERS DKS BD2336