The Nigeria-Sao Tome and Principe Joint Development Authority that oversees the bilaterally-owned Joint Development Zone in the oil-rich Gulf of Guinea had posted two conflicting schedules for the signings before abandoning both when a new contract had to be written to formalize the substitution of Addax Petroleum for Noble Energy as operator in the highly-coveted Block 4 concession originally won by Noble and ERHC.
After Noble ankled the block last month - as revealed exclusively in ERHC On The Move, precipitating a round of public announcements - the JDA then said in a press release that it had approved the substitution of Addax for Noble and provided an earlier date for PSC signings than a previous press release had supplied.
With both PSC schedules and the Addax announcement on its site, the JDA was embarrassed when it was informed by the Joint Ministerial Council composed of Nigerian and Sao Tomean officials that it alone had the power to approve the siubstitution, albeit on the JDA's recommendation.
It promptly did so, according to only a single article by veteran oil writer Mike Oduniyi in the leading ThisDay Online, but until now the issue of the PSC signings had remained very much up in the air.
But, as we suspected, the Oduniyi article was wrong, at least according to the Nwanma report.
In fact, according to the Dow Jones piece, Sao Tome officials have yet to sign off on the substitution, and they told Nwanma "[W]e need certain clearance from the Sao Tomean end."
Getting clearance from the Sao Tome side is usually far more painful and divisive than pulling teeth, and ordinarily leads to long delays in any contemplated project. With presidential elections scheduled for this Spring in Sao Tome, an island nation of less than 200,000 people, and the opposition power in party in the country's Parliament, the PSC approval by the JMC could still be a protracted affair.
The Nwanma article also has an error. It says, "The JDA made the latest block awards last May, with blocks 2 to 6 being offered to a different consortium made up of local and international oil companies." Actually, the other four blocks were offered to different "consortia," the plural of consortium, and each block has an ERHC Energy equity interest of between 15 and 25 percent.
The article should nonetheless improve the share price of ERHC Energy (OTC symbol: ERHE) substantially from today's $0.34 close, as PSCs could well be signed ratifying ERHC's substantial equity in four of the other blocks in the 2004 Round.
Here is the Dow Jones piece:
Nigeria, Sao Tome Oil Pacts Seen Before Christmas
by Vincent Nwanma
Wed, Nov. 30, 2005 16:40 GMT
LAGOS - Production sharing contracts and joint operating agreements in the oil blocks located in the Nigerian-Sao Tome Joint Development Zone will be signed before Christmas, a Nigerian government source told Dow Jones Newswires Wednesday.
The source also said that the Joint Development Authority, which manages resources in the maritime boundary shared between the two countries, has approved "in principle" Swiss energy company Addax Petroleum's role as operator of block 4 in the zone.
"The agreements will be signed sometime in December, possibly before Christmas. We are hoping so," the source said.
Addax, which already has operations in Nigeria, replaced Houston-based Noble Energy Inc. (NBL) after it withdrew this year from a consortium led by ERHC Energy Inc. (ERHE).
"Addax is almost there," the source said. "We have given an approval in principle, but we need certain clearance from the Sao Tomean end."
The JDA made the latest block awards last May, with blocks 2 to 6 being offered to a different consortium made up of local and international oil companies.
Since then, negotiations have been made on joint operating agreements among the consortia members.
The groups have also been negotiating with the JDA on the terms for the production sharing contract, under which the blocks will be operated.
All the agreements are subject to approval by the Joint Ministerial Council, the highest ruling organ of the JDZ, made up of ministers from the two countries.