Tuesday, January 11, 2005

Barry Morgan: Sao Tome, Nigeria, Delay Signing of PSC

Stung by harsh criticism of its lack of transparency and poor communications, the Nigeria-Sao Tome Joint Development Authority formally announced a delay in the signing of contracts for Block 1, saying that the two governments and ExxonMobil are wrangling over a paragraph on "transparency" of oil revenues, according to UpstreamOnline's Barry Morgan.

The announcement came a day after an unanticipated postponement of the signing of Production Sharing Contract for the block. Morgan reported:

The signing of the first deal allowing US oil companies to explore for crude oil off the shores of Sao Tome has been postponed again but is expected to take place soon, the country's Energy Minister said today.

The minister said the consortium of oil companies, including ChevronTexaco and ExxonMobil, had asked for a few more days to examine a paragraph recently inserted in the draft agreement to guarantee the transparency of oil revenues.

The signing of the deal - the first to explore areas with total oil reserves of at least 4 billion barrels thought to lie off the west and central African coast - had been expected by the end of 2004 but was postponed a first time to 10 January.

Delays have been frequent and infuriating for hundreds of thousands of investors making plays on the 26 companies involved in the bidding. They have brought the JDA into open ridicule as investors invent new names for its acronym, including "Just Delay Awards," "Joint Delay Authority," and "Just Don't Ask."

There was a glimmer of good news in the latest report from Morgan, whose sources have repeatedly burned him and his readers with false or misleading tips that have made their way into print. According to the report, JDA officials still expect to award contracts by the end of this month as originally anticipated:

... the winning bidders for five additional exploration blocks are expected to be identified this month.

But the official reason for the delay prompted even more ridicule by posters on the Raging Bull message board:

"The two governments (Sao Tome and Nigeria) have decided to insert a paragraph in the draft contract which refers to transparency and good governance," Energy Minister Arlindo Carvalho told Reuters.

The very idea that ExxonMobil and the two governments might be spending a week on discussion of a "transparency" paragraph was met with hoots of disbelief.

Walldog, a frequent poster on RB, quipped:

How will XOM be able to bribe..... anyone, if the process is transparent?....thats probably the hold up right now.

The PSC "may now be signed next week," Carvalho said.

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