Probably the most important new development is the emerging partnership of Devon and Pioneer, which jointly bid $50 million for Block 2 and $40 million for Block 3. Although it owns two Nigerian deepwater blocks – OPL 256 and OPL 252 – Devon held back from a meaningful bid in the first round; the link with Pioneer may indicate a change in its stance.
The association is significant because of the relationship that Pioneer has been developing with EHRC, the US-registered entity that has preferential rights to opt in to JDZ acreage. Both companies have signed an agreement on partnership.
Some potential difficulties to a tie-up have been overcome. A veteran of the US oil industry has been appointed managing director of ERHC, in place of Chude Mba, and the decision of key shareholder ‘Sir’ Emeka Offor to take a lower profile in the company’s affairs has undoubtedly reduced the risk of partnership with ERHC for a potential US operator like Devon, given its concerns about compliance with US regulatory regimes.
Despite the advantage of preferential rights, ERHC has been held back by difficulties in securing an international operator. The tie-up earlier this year with Pioneer has helped progress with the technical evaluation procedures, but bringing Devon to the party would make it an even more serious contender, especially for Block 2, which is ERHC’s priority. Without Devon there was a possibility that ExxonMobil could have won the operatorship through exercise of its opt-in rights, though it may need a partner among the bidders.
ERHC’s bid for Block 2 may have been assisted by the decision of Anadarko to omit the block from its bidding. Second time around, Anardarko has decided to focus on Block 4 and has put in a powerfully increased revised bid of $90 million for the block. This makes it a serious challenger, notwithstanding the offer of $70 million from Adenuga. It also outdoes the revised offer of $81 million from Canada’s Centurion, which, like Anadarko, bid a lower amount for Block 4 in the first round.
The article is available at http://www.menas.co.uk/ni_current.htm. Take a look at it soon; I'll be talking about it in today's updates of ERHC On The Move.
The probable author was Menas' newsletter editor Jonathan Berman, but the piece is unsigned. There are several typos in it, and one funny mistake in the first paragraph, where it says the Joint Development Authority could take in $433 friom the round. Not, as it should be, $433 million.
Following receipt of bids by 14 December, the JDA board heard an initial evaluation report on them on 19 December. This revealed issues concerning the quality of some of the new bids. In particular, as before, there are concerns about the capacity of some of the 23 bidders to support their calculations. Notably, companies linked with Nigerian businessman Mike Adenuga have made some fantastic offers, but issues of funding and technical capability are far from clear. Adenuga’s firm ECL has bid $175 million for Block 4 – up from $80 million in the first round – and a second company controlled by him, Conoil, has bid $150 million for the same block.
The article generally appears to be genuine, and seems to call on inside knowledge of what happened after JDA officials got a better look at the bids on Dec. 19. However, no one is quoted by name, and the author took pains to put the word "Sir" in Sir Emeka Offor in quotes. That suggests some antipathy towards Offor or the form of knighthood bestowed, which is from the Catholic lay organization Knights of Columba, a British version of the American Knights of Colombus. That this item was found and posted by the aforementioned Tiburon Tim, a particularly vicious and not especially literate fellow, is also cause for a caveat from me. There are several posters on RB who could have put the article together to tout ERHC, while making it appear they might be fans of another party.
The typos, the lack of quotes or reference to named officials, the inside knowledge of the nature of the "Sir" in Offor's name - information previously published only by me on Raging Bull, and then taken down with all my posts that same day when I was abruptly TOS'd in the middle of the night - are all warning signals to the careful reader that the article may have been invented by the author from research available to anyone rather than from genuine inside information.
Arguing for its authenticity is a rather solid grasp of the issues involved in the bid negotiations, British spellings that don't usually turn up on RB, and - other than the "Sir" business - a straightforward writing style that yields some clear and useful reporting at last.
1 comment:
Sharp!!
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