In another development, Shell - facing $1.5 billion in fines for damaging the environment - and ChevronTexaco have formally protested the seizure of 24 oil blocks now producing $1 billion of crude a year, including many of their own, by the Nigerian National Petroleum Company.
The Punch reported:
JDZ officials say Petrol giant Exxon Mobil is submitting its options today. It has been widely known that Exxon Mobil will not exercise its rights in this new auction; instead, it has cut a deal with the NNPC to build a refinery in Nigeria. The delay in exercising its options has had the JDZ waiting in the wings to figure out exact percentages to award block winners & factor Signature Payments for each block awarded.
Coupled with the arrest warrant issued for an Elf Aquitaine subsidiary's managing director (see below), the Federal Government of Nigeria appears to be sending a strong message to foreign oil companies that have balked at the country's insistence that they buy or build local refineries and submit to unusual contract demands, including a "transparency" clause that may force them to reveal important and closely-held production data to national officials.
It is unclear what consequences may arise from passage of the JDZ deadline. Among other possibilities, ExxonMobil may have farmed out its two choices to other bidders, and news reports have suggested they did. Coupled with the preferential choices to which ERHC is entitled in each of the blocks on offer, they could determine a winner in the long-delayed bidding process.
Reports have varied as to whether a Production Sharing Contract for Block 1, which was won by ChevronTexaco. XOM and Energy Equity Resources and is awaiting ExxonMobil's signature, will be signed. Today's article in Punch of Nigeria did not directly address that issue.
Both ExxonMobil, working with the NNPC, and ChevronTexaco, working with British Gas, have agreed to spend more than $13 billion in two Nigerian LNG plants in the past two weeks.
The circumstances suggest that the refineries were a reluctant investment for which they may be rewarded with the return of their property or other concessions. It is unclear how the agreements will impact the awards in the Joint Development Zone.
Royal Dutch/Shell has been building an LNG plant with the NNPC and French and Italian partners, and that project has expanded from a cost of $3.8 billion in 1999 to more than $10 billion now.
There is little question, however, that natural gas may play a major role in Nigeria's economic future. Some 60 percent of the gas is now "flared," or burned off, at wellheads. New technnology that allows it to be supercooled and transported more easily has made export prospects more promising.
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