Saturday, October 15, 2005

UpstreamOnline: Sao Tome Probe May Not Get Nigerian Help; Sao Tome President Blasts Ex-Communist Attackers

With a few paragraphs, the respected oil industry trade journal UpstreamOnline has cast doubt on the authenticity of a probe directed by the University of Tulsa College of Law's R. Dobie Langenkamp and demolished the likelohood of Nigerian cooperation.

The newspaper reported late Thursday evening that the executive director of the Tulsa law school's oil law institute, NELPI, has pushed the investigation farther than Sao Tome law enforcement's highest authority wanted it to go, and that Nigeria is unlikely to accede to the American oil industry's demands for help in blackening the names of smaller Nigerian firms who won acreage:

Meanwhile, in the JDZ, trouble is fomenting with fresh allegations of impropriety in the awards process.

Although Sao Tome state prosecutor Adelino Pereira initially said there was insufficient proof of corruption, the baton seems to have been picked up by US National Energy Law&Policy Institute executive director Robert Langenkamp who was sent to assist.

The Nigerian side, keen to get JOAs completed and rigs on site with minimal delay, is unlikely to co-operate enthusiastically with the investigation, and has already received a formal request for interviews from Pereira.


The article also bears out the prediction I made in a post on Investor's Hub last week that smaller players would be knocked out of their slots in several of the choice blocks and would see their acreage grabbed by majors like Anadarko Petroleum and Devon Energy who felt disappointed they didn't get more of Blocks 2, 3 and 4 when awards were announced on May 31.


The unsigned article alo revealed that ERHC Energy's substantial interest in those blocks will be carried to first oil - i.e., ERHC's share of development costs will will be paid for by their partners out of the first oil pumped from the highly prospective blocks - by their partners, Pioneer Natural Resources in Blocks 2 and 3, and Noble Energy in Block 4, the most sought-after of the five blocks offered in the 2005 round.

ERHC won operatorships in Blocks 2 and 4, and a substantial minority interest with Pioneer in Block 3.


Players closing in on JDZ final deals


UPSTREAM NEWS


COMPANIES awarded acreage in the recently concluded licensing round in the Joint Development Zone (JDZ) managed by Nigeria and Sao Tome&Principe gathered in Abuja last weekend to hammer out final terms of the Joint Operating Agreements (JOA).
However, concern is growing that several juniors in the equity line-ups decreed for blocks 2, 3 and 4 may not be in a position to easily finance their commitments.

As well as last-minute jockeying for advantage as several mid-sized partners seek to increase their equity stakes, there is a growing consensus among established players on the need to tighten up the language governing participation.

They want the Joint Development Authority (JDA) to insert a clause similar to that successfully sought by Chevron and ExxonMobil on Block 1. In addition to facing the more immediate consequences of not coming up with their share of the signature bonus, junior independents would have to look further ahead to secure their participation in E&P operations.

This may present a problem for indigenous companies with restricted access to project finance.

The JDA is under pressure to insist that every paying participant in a JDZ production sharing agreement should furnish a letter of credit or else escrow sufficient funds to cover its share of the proposed work programme.

If any company fails to do so within a prescribed period it will then be deemed in default. It is further understood that the international players may be seeking even tighter default language than that applied to Block 1 since there is considerably greater indigenous participation in blocks 2, 3 and 4.

Another factor is that US minnow ERHC Energy is carried through to first oil.

The issue is likely to be sensitive in Nigeria as officials are already expecting to push forward the date for payment of signature bonuses on blocks recently awarded onshore and in its own Exclusive Economic Zone.

Several briefcase companies were invited aboard the domestic round, winning equity but raising fears of financial incapacity. None of the winning companies, including Taiwan's Chinese Petroleum Corporation and the Korean National Oil Corporation, posted bank guarantees before the initial deadline and insiders believe the line-up will be recast several times before the dust settles on Nigeria's 2005 round.

Meanwhile, in the JDZ, trouble is fomenting with fresh allegations of impropriety in the awards process.

Although Sao Tome state prosecutor Adelino Pereira initially said there was insufficient proof of corruption, the baton seems to have been picked up by US National Energy Law&Policy Institute executive director Robert Langenkamp who was sent to assist.

The Nigerian side, keen to get JOAs completed and rigs on site with minimal delay, is unlikely to co-operate enthusiastically with the investigation, and has already received a formal request for interviews from Pereira.


In another development on Friday, Oct. 14, Sao Tome President Ferdinand de Menezes lashed out at the ruling ex-Communist party, the MLSTP, charging they were behind a series of defamatory attacks on him and his government.

R. Dobie Langenkamp, executive director of the National Energy-Environment Law & Policy Institute based at the University of Tulsa College of Law, is spearheading the attack on President de Menezes' role in the May 31 award of oil leases in the Nigeria-Sao Tome and Principe Joint Development Zone (JDZ).

The Movement for the Liberation of tSao Tome and Principe (MLSTP) is the former Communist Party of Sao Tome, and island of 170,000 people in the Gulf Of Guinea off the Nigerian coast of West Africa.

ERHC Energy and Noble Energy - two companies not represented on the institute's board - won operatorship in the highly prospective Block 4 that had been sought by Anadarko Petroleum and ExxonMobil, whose lawyers dominate the institute's advisory board.

Sao Tome's president blasts ruling party

www.chinaview.cn 2005-10-14 01:26:47

LUANDA, Oct. 13 (Xinhuanet) -- Sao Tome and Principe's President Fradique de Menezes has accused governing Movement for the Liberation of Sao Tome and Principe (MLSTP) of seeking to renege on a pledge to carry out a constitutional referendum on the islands' system of power sharing.

According to reports reaching here on Thursday, the charges made at a news conference appeared to bring the already poor relations between the head of state and Prime Minister Maria do Carmo Silveira's party to a new low ahead of a series of elections expected next year.

De Menezes accused the MLSTP of ordering Silveira's cabinet to transform the civil service into a "partisan" machine by removing non-party members from key posts without "just cause" to make way for party faithful.

He said, the MLSTP, was also behind a "political plot" of "constant attacks" and "insults" aimed to denigrate the president's image. There was no immediate response from leaders of the MLSTP.

During an earlier showdown in 2003, the president and parliament signed an agreement to work together to hold a referendum in 2006, MLSTP leaders have recently backed away, denouncing the scheme as "unconstitutional."

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