ERHC On The Move has more than 123,000 ERHE shares in its portfolio valued at $73,208, and would benefit substantially if such a price rise occurs.
Richardson, a Democrat who was rumored to be a strong contender for the vice-presidential nod from Democratic presidential candidate Sen. John F. Kerry last year, blamed a White House filled with "oil people" - both President George W. Bush and Vice President Dick Cheney have long histories with the oil industry - for a failure to effectively lobby OPEC oil-producing nations to raise quotas and bring prices down.
Particularly worrisome, Richardson said, is the fact that 30 percenrt of America's oil comes from Saudi oilfields, and that they are vulnerable to terrorism that could disrupt supply.
"One attack on Saudi fields and the price goes right to $80," said Stephanopoulos.
"I think $60 soon," Richardson responded.
The exchange on the ABC late-night television news magazine "Nightline" focused on ways to understand and perhaps alter America's dependence on foreign oil. The comments came as top Chevron executives in Nigeria are said to face imminent arrest on tax evasion charges and the closure of the company's Lagos headquarters after a Federal High Court decision upheld a ruling by a state attorney general seekimng the arrests and closure, according to the Nigerian Daily Independent newspaper.
That is only one small facet of an all-out political assault on multinational oil companies doing business in Nigeria. Some others are:
- Demands that the taxes on oil produced be raised to 85 percent; that the companies build huge multibillion-dollar LNG plants; that they pay billions of dollars in fines for environmental damage; that they refine much of their production in Nigeria; that they hire more Nigerian workers; and that they give up leases to oilfields not yet exploited.
- There have also been a number of violent incursions by armed ethnic guerillas who have overrun and badly damaged oil processing facilities and killed workers, including Americans, and until recently a widespread custom of theft from oil pipelines amounting to more than 100,000 barrels of crde oil per day.
Porter Goss, the new head of the Central Intelligence Agency, recently told a U.S. Senate committee that Nigeria is in danger of becoming unstable, and multinational oil companies undoubtedly face the risk of losing concessions, refineries, flow stations, pipelines and harbor faciltiies in the event of a change of government or a breakup of the nation.
That extreme measure is favored by some influential figures in both the north and south of the country, which has traditionally accused the wealthier north of exploiting the southern Niger Delta region's oil wealth, and is part of the reason for an historic dialogue on Nigeria's future among all sides. The National Dialogue was organized by President Obasanjo and it is now taking place in Abuja. Obasanjo has been a global leader in the effort to restrain price increases and raise OPEC quotas.
It is difficult to assess the value of ERHC Energy's Nigeria-Sao Tome Joint Development Zone preferential rights in the context of $60 oil and Nigerian instability, because the awards of concessions there have been repeatedly delayed and when they come, it is unknown whether they will encompass just the 560 million barrels of oil conservatively estimated to be in the five blocks where the company has rights, or even more, if the JDA grants ERHC and its partners one or more 51 percent allocations of the oil-rich blocks in the Gulf of Guinea.
ERHC Energy also has rights to two 100 percent bonus-free block allocations in the Sao Tome Exclusive Economic Zone and two more 15 percent allocations in other blocks for which signature bonuses must be paid.
The possibility that Nigeria may undergo dramatic changes would not alter a 2002 treaty between Nigeria and Sao Tome and Principe that ensures ERHC's rights - as well as those of ExxonMobil, which has no mainland exposure in Nigeria - nor its entitlements from Sao Tome and Principe, an island nation of 150,000 people.
Under those circumstances, and given U.S. government claims that about a quarter of America's oil needs will be met by the Gulf of Guinea oil in coming years, a valuation of shares of ERHE becomes almost prohibitively optimistic.
Moreover, the fact that slightly more than half of ERHC Energy's stock is held by two Nigerian companies, Chrome Energy and First Atlantic Bank Plc., makes the company substantially less vulnerable to nationalistic claims against clearly foreign-owned firms.
The positioning of ERHC Energy relatively to its multinational rivals may make the company's shares attractive to larger firms who want a greater presence in the region with stronger claims to Nigerian participation.
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