Tuesday, January 31, 2006

Congratulations, It's An Investor!

ERHC On The Move sends it warmest congratulations this afternoon to Stockhocker, a longtime ERHC Energy investor who posts on the Investor's Hub message board, whose wife is having a baby today.

We're all anxiously awaiting the good news, Stockhocker, and we send you our very best wishes.

Here is Stockhocker's glad announcement:

Posted by: stockhocker
In reply to: walldog0 who wrote msg# 19852 Date:1/31/2006 3:51:14 PM
Post #of 19905

I understand that. Your original post stated he would file to show he owned no shares. Not the same thing. Anyhow, gotta go, my wife is having a baby! Off to hospital now - ya'll take care of this baby, while I go take care of mine!

As Tough As They Come

Every inch the defiant roughneck, Patrick Landry of Lafayette, La. was the lone American among four Royal Dutch Shell workers kidnapped from its Benisede platform off Bayelsa State in the Niger Delta on Jan. 11 and held by Ijaw militants for 19 days. Landy and his co-workers were freed yesterday after militants said they were paid $770,000, a claim denied by Shell and others. After their liberation the four met with Nigerian President Olusegun Obasanjo at the State House in Abuja.
Joe Shea/The American Reporter

Punch Article Hits Paper Bids By Oil Majors In Nigeria's 2005 Round; JDZ's Block 4 As A Beacon Of Value

The Punch of Nigeria has an interesting story today that tries to ferret out some of the little-known reasons big oil companies failed to mount anything more than paper bids for some of the 44 blocks in the 2005 Licensing Round conducted by Nigeria for its offshore and inland properties, an exercise that currently has only two paying customers.

The broad failure of the round depicted rather brutally in the Punch article is mirrored in the confusion and political strife over blocks awarded in the Nigeria-Sao Tome and Principe Joint Development Zone, where the $90 million signature bonus in Block 4 is used by a Federal Government spokesman, ironically, as an exemplar of the value of the blocks. He sawys, "[I]f a block could go as high $90million in the Sao Tome and Principe, there was no reason why Nigeria’s could not get up to $50million.”

The source for that comment is former ERHC Energy executive Tony Chukwueke, now director of the Dept. of Petroleum Resources, and he sounds like someone who is talking of a done deal, not of a deal that has gone astray.

ERHC Energy and Addax Petroleum will be required to pay the $90 million fee when Production Sharing Contracts for the block are signed, perhaps as early as next week. Addax is carrying ERHC Energy to first oil, and has published a prospectus on the Toronto Stock Exchange seeking $400 million to pay the fees and the cost of development, as well as an $18 million payment to ERHC, which will have slightly more than 26 percent of the block.

Here is the article, a long one but well worth the read:

Tuesday, January 31 2006

Why majors shunned Nigeria’s 2005 oil block bids

Clara Nwachukwu

For the umpteenth time, the Department of Petroleum Resources has insisted that the major oil producing companies; Shell, Chevron, ExxonMobil, Total, and Agip participated in the August 2005.

Only Agip with its local content vehicle partner, emerged winner of block 281, which was tied to an independent power project.

The DPR believes that the majors could not win more oil blocks because “they did not bid high enough for them,” adding, “Except for Shell, all the majors, Agip, Total, Chevron and ExxonMobil participated in the bid round.”

But available information indicated that although the majors “participated,” it was more of “fulfilling all righteousness” than any serious intention to acquire new acreages, beyond the collection of forms indicating interest to participate.

Indeed, the majors had indicated that they already had their hands full without having to add more, as many blocks were even withdrawn from them and thrown into the bid round basket.

As the DPR noted soon after the bid round, “A lot of the major oil companies have worldwide portfolio and they consider the exposure to certain countries and what they can manage. Some think their exposures are large as well as the risk, and preferred to manage what they already have. That is what Exxon and Chevron said, that they wanted to manage their exposures in Nigeria.”

It was also suspected that the majors had played low because they were irked by the blocks withdrawn from them, which government justified in that they had kept the blocks for more than 10 years without developing them.

While all of these might have been contributory factors, some disclosed that the main reason was that the offer prices for the blocks were rather unrealistic and too expensive, as well as the fact that there were many biddable items to determine the signature bonus.

Although the DPR and the Ministry of Petroleum Resources had argued that the blocks were not over-priced, however, the present difficulties in the winners paying the signature bonus indicate the contrary.

As far as Tony Chukwueke, Director, DPR, is concerned, “The reserve value for the blocks were correct,” pointing out that "if a block could go as high $90million in the Sao Tome and Principe, there was no reason why Nigeria’s could not get up to $50million.”

Indeed, Agip offered the lowest price of $10million among all the blocks zoned for the IPP, where other investors bidded as high as $75million for block 281 and $65million for block 290.

According to industry sources, “Government is in dire need of funds, so it got the Asians and the indigenous operators to price the blocks out of economic sense. Secondly, government had hiked industry tariff and reviewed the production sharing contract agreements.

“It is not done anywhere in the world, one of them has to give way for the other if they wanted to make a success of the bid round, reduced tariff enough to get higher signature bonuses.”

For instance, one of the majors recalled, “We had somebody bid $180million for an onshore block, where I know from experience, should not be more than $20million.”

As one operator noted, “If we had only professionals in the exercise, the outcome would have been different. We would have had a lot more sanity, because some consultants were told to be aggressive.”

He added, “There is need to discourage reckless bidding, and government should legislate on some of these issues.”

Another issue was that of the local content vehicles, an avenue government wanted to use to get more indigenous participation in the oil and gas industry in line with its Nigerian content objective.

As much as all the majors expressed support for the LVC initiative, many believed they should have been given the opportunity to choose their partners, rather than the marriage of convenience government forced on them, as they knew little or nothing about their local partners.

In addition to these, some of the majors revealed that from the onset, it appeared government had made up its mind to award the ‘juicy’ blocks to Asian investors, in pursuit of its aggressive quest for new investors, particularly those with heavy investment portfolio for the downstream sector, coupled with the fact the there were not enough data on the blocks to guide investment decision.

From unfolding events, it has become apparent that price was in- deed, the major issue in the bid round, as out of the 44 blocks awarded from the 77 offered, only18 were able to pay the signature bonuses.

Only two of them have gone as far as signing the Production Sharing Contracts, which raises questions on the payment status of the rest 16, even as the fate of the rest 26, particularly those that have made part payments, remain uncertain.

However, Chukwueke has said that winners of oil blocks who were yet to pay for their respective signature bonuses, did not have any excuse for defaulting.

Consequently, all those that have not paid run the risk of revocation, which already had received Presidential nod, while their money would be refunded to them.

The DPR boss insisted that the excuse that, “they did not bid well enough,” was not tenable, as this smirked of unseriousness.

“That is why the President said that they should all be revoked, because if they did not pay for the signature bonus, they don’t get the oil blocks,” he added.

Daukoru, had hinted that government was in a fix on deciding what to do with those who made part payments, saying, “We are looking at how to handle their case, whether to consider them as outright losers or allow them to meet up with their payments.”

The DPR explained that the delay in signing of the PSCs was connected with the fine-tuning of the about 76-page documents between it and the Nigerian National Petroleum Corporation.

For these reasons, stakeholders advised that bidders should attach cheques of between 25 and 50 per cent of the cost of the signature bonus to their bids in subsequent rounds, to prevent frivolous bidding.

Up till now, government is still keeping the names of those who have paid and those that have not close to its chest, in line with its consideration of discretionary allocations for oil blocks, which stakeholders have advised against, insisting that there should be no modifications after the end of the bid rounds.

The major thrust of 2005 bid round according to DPR, was to contribute to the long-term global energy sufficiency in Nigeria, to attract the most viable and commercially attainable value for its hydrocarbon asset in the Niger Delta, the inland basin and the deep offshore.

For the first time, government looked in totality at all the basins in Nigeria,to expand opportunities for gas development for domestic and export market.

Also, the bid round was meant to attract new international oil and gas operators whose entry would stimulate and fast track the new competitive commercial arrangement and technology.

THE PUNCH, Monday, January 31, 2006

New Call For JDZ Probe Reeks Of Same Old News

A little-known outfit called Publish-What-You-Pay has joined forces with the R. Dobie Langenkamp crew to call for more investigations of the 2004 Licensing Round awards in the Nigeria-Sao Tome and Principe Joint Development Zone, the Vanguard daily reports from Nigeria this morning.

As usual, ERHC Energy is the scapegoat instead of ExxonMobil and Anadarko Petroleum, the two companies whose lawyers fomented the report Sao Tome President Fradique de Menezes calls a "whitewash" and "incomplete."

The Vanguard headline uses the word "indicted" in the sense of "accused of," not as Westerners familiar with the grand jury system use it, to formally accuse persons and bind them over for trial.

The probe, undertaken by an attorney closely associated with house lawyers for Exxon and Anadarko at the Energy Law Institute and the Tulsa University School of Law - some of whom were his students and other were earlier his classmates - is a brute-force attempt to wrest control of Block 4 from a small Nigerian-owned firm that spent $11 million setting up the Joint Development Zone when few others were interested in Sao Tome's oil prospects. Exxon has used all of its influence to try to destroy the very hardy chairman of ERHC Energy, Sir Emeka Offor, but to date has failed.

Meanwhile, the report ignores bribery allegations subject to the Foreign Corrupt Practices Act that have been leveled at both companies in hearings before the Senate Commerce Committee. The corruption charges stemming from their projects in Equatorial Guinea encompass almost all the players in the Joint Development Zone except ERHC Energy. In addition, ExxonMobil has been charged with evading hundreds of millions of dollars in taxes and operating unlicensed, illegal airports in Nigeria.

Nonetheless, the probe tries to make Offor the bad guy, when in fact he is rather more circumspect than his major-league competitors.

The error-ridden report admitted at the end that it had found no evidence of wrongdoing on Offor's part, but apparently never looked at the efforts by Anadarko to add ExxonMobil as a partner in its bid for the coveted Block 4 of the JDZ after the deadline for bids had lapsed. ExxonMobil sent 24 big-time investment bankers and lawyers to Abuja to argue their case, but the arguments fell on deaf ears and now may never be revived.

Here is the PWYP story from the Vanguard, rehashing charges that have now been rejected three times, including by OPEC President Dr. Edmund Daukoru, Nigeria's oil minister:

PWYP backs inquiry faulting JDZ licensing round ...Nigeria, Sao Tome officials indicted for corruption
By Hector Igbikiowubo
Posted to the Web: Tuesday, January 31, 2006

THE International coalition of the Publish What You Pay (PWYP) campaign and its partner organizations in São Tomé and Principe and Nigeria have voiced concerns about serious flaws revealed by a report into the 2005 bidding round for oil blocks in the Joint Development Zone (JDZ). PWYP have also pointed out that the end result appears to be substantial revenue losses, to the detriment of the people of both São Tomé and Principe and Nigeria.

In a statement released Sunday, PWYP coalition pointed out that an inquiry commissioned by the Attorney General’s Office of São Tomé has concluded that the bidding process was ‘subject to serious procedural deficiencies and political manipulation, including the award of interests to many unqualified firms or firms with inferior qualifications, technically and financially’.

The report’s findings specifically raise the question of whether the Nigerian government is implementing full transparency in the licensing procedures for the JDZ, as per its commitment in the Abuja Declaration signed with São Tomé in June 2004.

More broadly, the report’s revelations sit uneasily with the Nigerian Government’s promise to turn its back on corruption, and reform oil sector management.

The serious irregularities exposed in the report include the following:

  • The criteria for awarding licences were vague and did not reflect international best practice. This gave the Joint Development Authority (JDA) and the Joint Ministerial Council (JMC) unusually wide discretion in selecting licensees. Some companies were also given the opportunity to amend their bids during the selection process, in contrast to international industry norms;

  • Licenses were awarded to technically and financially unqualified companies. Bids by companies with no prior deepwater drilling experience and/or without the requisite financing were favoured over more credible bids by internationally respected operators, in some cases leading to lower signature bonuses. Due diligence was performed on the licensees only after the final awards had been determined;

  • Several representatives on the JMC and the JDA, including officials from São Tomé, had conflicts of interest, holding stock in companies bidding for and receiving awards.

A significant part of the report focuses on Environmental Remediation Holding Corporation (ERHC), whose majority shareholder is a Nigerian oil company.
ERHC holds a highly favourable and controversial contract with São Tomé giving it free options on the country’s oil blocks. This may have deterred international oil companies from entering the bidding round.

The report pointed out that, if enforced, the ERHC contract could potentially result in $60 million in lost revenue in a country whose total annual budget is $50 million.
The enquiry questions the validity of ERHC’s contract and its options, and alleges that this could be the result of political pressure and payments to public officials. It recommends that ERHC’s licenses and contract be frozen until all allegations of corruption have been properly investigated.

It further calls on the JDZ agencies and the governments of São Tomé and Principe and Nigeria to revise the bidding guidelines to observe international best practice, including pre-qualification for competing companies and public disclosure of any conflicts of interest.

The Abuja Declaration was intended to establish a model for contract and revenue transparency in joint development zones: without such transparency, there is no guarantee that revenues from natural resources like oil will benefit all Nigeria and São Tomé’s citizens.

Publish What You Pay noted that it fully supports the Attorney General’s recommendations and calls on the São Tomé and Nigerian governments to take all appropriate measures to implement them. We also call on the US authorities to investigate further allegations that ERHC made improper payments to foreign public officials in order to obtain licenses, a practice that if confirmed would represent a clear breach of the Foreign Corrupt Practices Act (FCPA).

Monday, January 30, 2006

Mutwadadi: JMC Meeting Could Come Sooner

In a second note to clarify an earlier one, our reliable source Mutwadadi says that JMC meetings could come sooner than expected, bringing surprises along with them.

The celebrated tipster also took pains to distance himself from observations by a top Washington-based news service investigative reporter that tied ERHC Energy chairman Sir Emeka Offor to an investigation of influence-peddling by Louisiana Democrat Rep. William Jefferson.

Here is Mutwadadi's latest note:


just to clarify:

i've not heard anything to suggest emeka offor is having any problems with the US authorities. In fact, he was in the us last week to finalize the transfer of CEO power to brandhuber; to the best of my knowledge, he arrived and left without attracting the interest of any agency.

i'm not aware of any link between offor and/or ERHC and jefferson.

as for the jmc: all sides appear to recognise it should meet shortly. some of the things on the agenda are clear. too much speculation would be unwise, though -in the past, such meetings have often sprung surprises.

all best


Nigerian Militants Free Foreign Oil Workers

As ERHC On The Move reported they would more than a week ago, Nigerian militants have finally released the four oil workers kidnapped 20 days ago from the Royal Dutch Shell Benisede FPSP, Reuters is reporting this morning.

Here is the story:

LAGOS, Nigeria (Reuters) -- Nigerian militants released four foreign oil workers on Monday, ending a 19-day hostage crisis that also saw Nigerian oil output cut by a tenth.

The hostages -- an American, Briton, Bulgarian and Honduran -- were abducted from an offshore oilfield in the southern Niger Delta on January 11, one of a series of attacks on the oil industry in the world's eighth largest exporter.

"They have all been released. They are all alive and well," said the spokesman for the southern state of Bayelsa.

The militants had demanded more local control over the delta's oil wealth, compensation for oil pollution to villages in the vast wetlands region and the release of two Ijaw leaders. The Ijaw are the biggest ethnic group in the delta.

Diplomats and militants said it was unlikely that the release of the hostages would mark the end of attacks on oil platforms and pipelines, which have forced Royal Dutch Shell to close 221,000 barrels per day of production.

"I think there will be more attacks," said a security consultant for a multinational oil company in Nigeria.

A militant Ijaw group with apparent links to the kidnappers sent an e-mail on Sunday agreeing to the hostages' release as a goodwill gesture to the international community.

"The Movement for the Emancipation of the Niger Delta has agreed to release the four hostages on humanitarian grounds as an offer of goodwill to the people of the world," said the statement, signed by imprisoned Ijaw militia leader Mujahid Dokubo-Asari.

The kidnappers had demanded freedom for Asari, who is standing trial for treason, as one condition for releasing the hostages.

A militant source involved in the negotiations said the government paid 100 million naira ($770,000) as a ransom to the kidnappers.

On Sunday, police said about 20 armed men stormed the headquarters of a South Korean oil services company in the delta and stole more than $300,000 in the latest attack on foreign firms. There were no casualties. (Full story)

The attack occurred only five days after nine men were killed during an attack on the offices of Italian oil company Agip, a unit of ENI. The attackers robbed a bank on the premises.

The militants' violent campaign has forced Shell to remove more than 500 employees from the delta.

Oil unions have threatened to withdraw from the delta, which produces almost all of Nigeria's 2.4 million barrels a day of oil, if security deteriorates further.

With oil markets nervous about tension between the West and Iran, the unrest in Nigeria's oil heartland has contributed to a rise in prices to four-month highs of more than $67 a barrel.

Sunday, January 29, 2006

Iran Crisis Could Provoke $90 Oil, British Papers Say; Offor In US Last Week, Mutwadadi Says

Britain's Guardian Unlimited warns today that next week's United Nations showdown on Iran's nuclear ambitions and proposed sanctions could prompt a sharp rise in oil prices to $90 a barrel, the paper says today.

The paper's Website says Iran may decide to stop shipment of oil, but does not mention the Iranian-controlled Strait of Hormuz, through which passes some 25 percent of the world's oil supply. The paper focuses only on the threat to the five percent of world supply produced by Iran.

ERHC On The Move reported an Iranian oil official's threat to close the strategic Strait of Hormuz early last week.

If a rising tide lifts all boats (some may be badly moored and smash on the rocks, of course), ERHC Energy's equity in five blocks of the Nigeria-Sao Tome and Principe Joint Development Zone could attract a swarm of new investors - especially if, as some perceive, a JMC meeting early or late in the week of Feb. 5-11 yields signed Production Sharing Contracts.

Regrettably, though, ExxonMobil and Anadarko may have yet another bomb to drop on ERHC's share price, this one from their friends at the Justice Dept. who have turned a blind eye to the bribery allegations against them in Equatorial Guinea that have come before the oil-friendly Sen. Ted Stevens' Senate Commerce Committee.

Well-timed strikes by these two reprobates thus far have short-circuited every attempt to bring ERHC's share (OTC BB symbol: ERHE) price to levels consistent with ERHC's prospects as joint operator of Blocks 2 and 4 - which XOM and APC especially wanted - and holder of substantial equity in all three other blocks.

ERHC On The Move has learned from a very knowledgeable source in Washington that the company may be tied to the influence-peddling probe mounted last year against Louisiana Rep. William Jefferson.

Our source, a top Washington-based investigative reporter for one of the nation's largest wire services, says "We're looking for more confirmation that Global Environmental Energy is part of the probe. We also suspect, but don't know for sure, that the feds are looking at Jefferson's role assisting ERHC."

Moreover, our most reliable source of information on the JDZ, Mutwadadi, whom we asked for a comment on the probe, indicates he remains pessimistic about PSCs, saying they well may not be signed until after April despite the drilling in Block 1.

Here is mutwadadi's note:


Thanks for your note. Feds didn't turn up much on Atiku Abubakar when they had a look, but Jefferson surely has form in Nigeria. ERHC chairman felt sure enough to travel to the US only last week, although I agree many there in the law enforcement community might have an interest in his affairs. On the other hand, Carl Masters and Andy Young can;t be too far behind Jefferson. And as for Offor - how he did it is a mystery, but the collapse of the bank looks set not to cause further difficulties. Cynics may note he is from the same state as the Central Bank governor.

The JMC has to meet soon because the JDA is without a budget and without any resources.

One block is ready to be signed off. One block is not. The others are less clear. There are two problems. Sao Tome is in election mode and even more paralysed than normal. Nigeria's deputy oil minister has always insisted on simultaneous signing of all the blocks.

The factor that may overcome such constraints is the block 1 situation: it will be clear by March whether there has been a discovery or a dry well. Either way, that will change the situation significantly.

The question is, are officials ready to gamble on the outcome? If they are not, it's possible something can be signed off next month, but there is a lot of lobbying left to do if that were to include block 4. If they do want to gamble, there's no guarantee anything of substance will happen 'til after April.

Keep well.


As to the origins of this note: A poster named Spec on I-Hub fantasized a chain of events that supposedly began with a letter from me to Mutwadadi asking something or other. Actually, it began a month ago when an investigative reporter based in Washington - as noted above - contacted me for information about a GEECF principal. I was able to help. A full month later, he replied to thank me, and I wrote back asking when his story on GEECF might come out. I got back, in part, the response I quoted above, and then passed that on to Mutwadadi for comment, as below:

To return the favor, I thought you might appreciate this tidbit. [Name withheld] is a top investigative reporter with [Name withheld].
Please keep it in confidence.

Have you heard anything other than what we have on the possible JMC meeting
date, or the JDA's "remarkable" progress on PSCs?



Joe Shea
The American Reporter

In contrast, here's the fantasy Spec concocted:

As for Mutwadadi's little note, Joe sent Mutwadadi an email asking about ERHC's new CEO questioning his "could be" criminal background. Joe also asked him how Offor escaped charges in the collapse of Afex Bank. Mutwadadi's admitted lack of knowledge on the JMC meeting and possible outcomes this month means both sides are being tight lipped about their plans and a power play is about to happen.

Be careful if you rely on information from Spec!

Assassination Attempt On Soludo's Father

On another topic, we learned early this morning from the Guardian of Nigeria that the aging father of Prof. Charles Soludo, the stalwart chaiorman of the Central Bank of Nigeria, was attacked by apparent assassins who got into his compound through some new construction at the rear this weekend and succeeded in badly injuring him with a beating that resulted in the loss of one eye.

We extend our deepest sympathies to Prof. Soludo, and express our strongest condemnation of an act that shocks the conscience, is uncivilized, ugly and unwarranted in the extreme.

Finally, here is the the story from England's Guardian:

Iran crisis 'could drive oil over $90'

Prices climb ahead of critical week as nuclear row escalates. OPEC says it won't increase quotas to cover for production shutdown

Heather Stewart, economics correspondent
Sunday January 29, 2006
The Observer

Oil markets are braced for a nail-biting week, as world leaders demand action against Iran over its nuclear ambitions, and analysts warn that crude prices could reach $90 a barrel if the oil-rich state retaliates by blocking supplies.
The International Atomic Energy Agency meets on Thursday to decide whether to refer Iran to the United Nations Security Council.

Mahmoud Ahmadinejad, Iran's president, has threatened to respond to any punitive action by cutting off the 2.6 million barrels of oil a day it pumps into the markets - 5 per cent of the world's supply.

Jittery investors sent the price of Brent crude to $67.76 a barrel in New York on Friday night, as fears about the Iranian crisis and rebel attacks on oil facilities in Nigeria rocked confidence in an already tight market.

Kona Haque, commodities editor at the Economist Intelligence Unit, said the worst case scenario of a shutdown of supplies from Iran would be 'absolutely devastating ... I wouldn't be surprised to see the price go over $90 a barrel'. She said fears about Iran are already adding a $10 risk premium to oil prices, which could remain in place for months as the crisis escalates. Davoud Danesh-Jafari, Iran's oil minister, has warned that the result of punitive action against his country would be 'the unleashing of a crisis in the oil sector'.

'The resumption of nuclear research by Iran is currently the market's largest preoccupation,' said BNP Paribas oil analyst Eoin O'Callaghan. He has pushed up his forecast for average oil prices this year to $65 a barrel because of geopolitical risk. He points out that the oil price rose more than 60 per cent in the run-up to the Iraq war; a similar increase now would take prices to $94.

Haque said that with little spare capacity in the market, prices are much more vulnerable to political shocks: 'We need a lot more supply capacity to have a cushion; it's going to take another couple of years until that happens.'

The oil producers' organisation Opec meets in Vienna on Tuesday amid calls from some members, including Iran, to cut back production and push up prices further. But most analysts believe production quotas will be left unchanged. 'There's no pressure on Opec to do anything,' said Rob Laughlin, oil analyst at Man Financial.

He said the Nigerian situation could potentially be worse for oil prices than fears about a supply squeeze from Iran. Production levels in Nigeria have already been lowered by 200,000 barrels a day in an effort to protect facilities from the rebels, who have deliberately targeted foreign oil companies. 'Nigeria is probably as big a problem as Iran for us. We're pretty politically squeezed, between the Nigerian rebels and the Iranian president,' said Laughlin.

The president of Opec, Nigeria's Edmund Daukoru, fuelled market fears on Friday when he told Reuters that his organisation was unlikely to step in with extra supplies if the Iranian crisis worsened. 'If Iran decides to stop production, or is forced to stop production because of a sanction, I don't think Opec necessarily has a role to play there,' he said.

Crude peaked at just over $70 a barrel last autumn after hurricane Katrina, but demand from fast-growing economies such as China and India, together with supply shortages in a number of producing countries, has prevented prices from dropping much below $60.

Investment in Russian oil production has been weak since President Putin's tax raid on the oil giant Yukos, and Iraqi output is well below the levels Washington hoped for before coalition tanks rolled into Baghdad. A cold snap in the US, which has so far had an unusually warm winter, could push prices up further in the weeks ahead. 'Should cold weather return to the US, then we'll really be in trouble,' said Laughlin.

Friday, January 27, 2006

Breaking News: 7.7 Quake Hits Offshore Indonesia In Banda Sea

A huge earthquake has just struck offshore Indonesia in the Banda Sea, the United States Geophysical Service's Earthquake Hazards Program reported minutes ago.

[Double-click to enlarge] The Banda Sea, a premier region for oil exploration, was struck by a massive 7.7 earthquake this morning. There was no tsunami threat to the U.S., but a similar quake near Banda Aceh, Indonesia, on Christmas Eve 2004 killed 180,000 people.
Source: Google Earth

The undersea quake was measured at 7.7 on the Richter Scale.

There is no threat to the United States of a tsunami, however, as they do not historically occur in the Pacific, a tsunami early alert center said. However, there are almost no sensor arrays in the region, a flaw that helped lead to the tsunami disaster that killed 180,000 people on Christmas Eve in 2004.

Here is the reading from the USGS:

MAP 7.7 2006/01/27 16:58:49 -5.448 128.099 341.5 BANDA SEA
Here is the Tsunami alert:

WEPA43 PAAQ 271714

ISSUED 01/27/2006 AT 1714 UTC



TIME - 0759 AST 01/27/2006
0859 PST 01/27/2006
1659 UTC 01/27/2006




Four Hostages 'Going Nowhere," Kidnappers Say

In a report that contradicts more positive spin coming from the Federal Government of Nigeria, the Guardian of Nigeria reports in a breaking news summary today that their kidnappers say four hostages taken from Royal Dutch Shell's Benisede oil platform offshore Bayelsa State are "going nowehere."

Here is the Guardian's report:

Nigeria gang issue hostage photo
Nigerian kidnappers holding four foreign oil workers have issued a first picture of the captives, who appear relaxed and in good health. But the gang denied reports they were close to handing over their captives. In an e-mail to the Reuters news agency, the group holding the men said the foreigners were "going nowhere".

The men were seized 17 days ago in the Niger Delta region in an armed raid by militants demanding more control over resources in the region. Nigerian government officials had suggested that the four men could be freed at short notice after negotiations. State negotiators and security chiefs released the image of the four hostages - a Briton, an American, a Bulgarian and one man from Honduras - and boosted hopes that they could be freed. However, the kidnappers' denial came twinned with threats of imminent new attacks. "I promised you the hostages were going nowhere in spite of the rumours and repeat that to you," the e-mail to Reuters read. The group holding the men, the Movement for the Emancipation of the Niger Delta has launched several attacks on oil interests in the region. They are demanding the release of two ethnic Ijaw leaders currently in detention, and freer access by local people to the area's vast oil resources. Royal Dutch Shell, the largest oil producer in the Niger Delta, has cut production capacity and withdrawn hundreds of staff pending discussion on security with Nigeria's government.

JMC Meeting Dates Suggested; Pioneer 'Excited," St. Amour Says

A post from Nashville film salesman Mark St. Amour on I-Hub and Raging Bulk says a source at the Nigeria-Sao Tome and Principe Joint Development Authority - one that has been wrong on virtually every occasion - says that the Joint Ministerial Council meeting delayed last week will be held on "Feb. 6th and 7th" or "Feb. 9th and 10th," earlier than many investors had anticipated.

The post goes on to say that the JDA will issue a press release after the JMC meeting to tell folks when the Production Sharing Contracts, which Mark's post says are close to completion after having been completed more rapidly than expected, will be signed.

Feb. 7 is my birthday, and a JMC meeting would be a great present. Actually, though, for some reason a lot of great things have happened within a few days after my birthday, and I wouldn't be surprised if Mark's 0-10 won/lost record inches up to 1-11 for this occasion!

Here is Mark's post, accompanied by all the usual caveats:

Posted by: markgovols
In reply to: None Date:1/27/2006 10:32:38 AM
Post #of 19527

Just spoke with JDA source. JMC will be meeting on Feb 6th and 7th or worst case Feb 9th and 10th. Source will know soon which of those two dates as scheduling is being finalised as we speak. Source said that "remarkable progress has been made" and that finishing touches have been put on PSC's. Source said that PSC's will be signed and announced at a PSC Signing Ceremony by end of February. He acknowledged this was earlier than what was expected. JDA will PRESS RELEASE PSC Signing Ceremony date at conclusion of JMC meeting.


Mark followed up this post with another recounting a call this afternoon to Pioneer Natural Resources' Investor Relations people, who are infinitely more reliable as sources than the JDA. Pioneer is our partner ion Block 2, where we also won operatorship. Here is that report:

****Spoke with PIONEER****

Just got off phone with PXD VP IR. He said Pioneer is excited about working with ERHC and mentioned his team was very excited about drilling in JDZ. I mentioned I had spoken with JDA and JMC is scheduled to meet around Feb. 6-10th. He didn't want to comment on specific dates but was very optimistic contracts would be signed soon. He alluded to the fact Cheveron-XOM drilling in BLK 1 started Jan. 14th and they are watching closely like everyone else to see what happens. I asked him if he had heard about new ERHC CEO. He said he had and the new CEO obviously "had some very impressive credentials." He also mentioned PXD is drilling north of JDZ right now and will have results soon.

More things adding up IMO. Call PXD IR to verify. Here is the number: 972-444-9001.

Energy Compass Says Memon Was 'Worn Out' By Sao Tome Soap Opera

In another one of those brief, pricey blurbs that shows they've carefully read this blog, Energy Compass (a division of Energy Intelligence) slants another article against ERHC Energy.

Notably, the same publication has done almost no reporting on bribery allegations against majors like ExxonMobil, ChevronTexaco, Devon Energy, Marathon Oil, Noble Energy and others that have come before the U.S. Senate Commerce Committee under the Foreign Corrupt Practices Act, where more hearings are currently blocked by oil-state Sen. Ted Stevens (R-Alaska).

Here is their latest weave:

Soap opera continues in Sao Tome bid round
337 words
27 January 2006
Energy Compass
(c) 2006 Energy Intelligence Group. All rights reserved

A fresh chapter opened last week in the saga over awards in the joint development zone between Nigeria and Sao Tome and Principe, when ERHC Energy (EE), the controversial company with rights to stakes in several blocks, lost its president. Sources say Ali Memon left of his own accord after 16 months, worn out by the tussles that have paralyzed progress towards joint operating agreements and production sharing contracts.

Nigerian-owned, US-listed EE has interests in Blocks 2, 3, 4, 5 and 6. These include equity conferred by a controversial agreement between Sao Tome and Environmental Remediation Holding Co. (ERHC) -- EE's previous incarnation -- as well as equity gained through joint bids with partners (EC Oct.7,p4). The company has since lost two US partners. Devon Energy, which bid with EE and Pioneer for 65% of Block 2 and 25% of Block 3, pulled out last year, as did Noble Energy, which bid with EE for 60% and operatorship of Block 4. The duo were initially resigned to carrying EE, but quailed at the prospect of carrying other small firms owned by influential Nigerians and became concerned about reputational risk (EC Nov.4,p9).

Sao Tome officials also oppose EE's recent decision to appoint Swiss Addax in Noble's place. They are thought to prefer Anadarko, the original high bidder, which ended up being pushed out of Block 4 into Block 3 under Nigerian pressure in post-bid machinations.

A suit brought by a former Romanian partner could prove a further nail in EE's coffin. Retrom is suing Chrome Oil Services, another company belonging to EE's owner, Chief Emeka Offor, for almost $1.4 million. Retrom accuses Chrome of failing to pay for services in managing turnaround and maintenance at Nigeria's Port Harcourt refinery. After a Paris arbitration court recommended that Chrome and its partners pay Retrom $880,000 plus interest, the Romanians took the case to the high court in Lagos.

As one might expect, there was a mixed reaction to the news on I-Hub. Below is a selection of comments. Here's one from Europe:

Posted by: claudealain
In reply to: None Date:1/27/2006 7:31:46 AM
Post #of 19496

The fact that everybody is against ERHE clearly shows, that everybody wants what ERHE has (rights to billions of BO and therefore to multibillions of USD)! Everybody is envious, plain and simple!

I'm still accumulating slowly and patiently waiting. Long & strong ERHE!

GLTA, Claude Alain

Here's a quintessentially American take:

Posted by: upatnight
In reply to: stun who wrote msg# 19486 Date:1/27/2006 6:00:34 AM
Post #of 19496

Another editorialized article which has little bearing on the truth. Lacks any mention that ERHE replaced Memon and indeed Memon was more than likely shown the door. And a "nail in the coffin", what kind of horse#### is that?! Offer is sued for 1.4 mil, which is pocket change for him and this biased article ties it to ERHE.

And here's my own favorite:

Posted by: stun
In reply to: Art2004 who wrote msg# 19487 Date:1/27/2006 5:58:15 AM
Post #of 19496

Must say that the same thoughts occurred to me. I also find it hard to believe that Memon voluntarily left and that there just happened to be a successor all primed and ready to go on the sidelines.

It must be difficult for a publication which relies so much on information from the oil majors to look objectively at minnow upstarts!

Not wishing to bring politics into it, but obviously security of supply is quite a theme in the US now. Do people believe that the US Govt might intervene against ERHE in favour of large multi-nationals, or am I having illusions of whisper-quiet black helicopters again?

India Changes Tune, Will Now Take $6 Billion Plunge Into Nigerian Waters

Reversing itself within just a month's time, the Indian government said Thursday it has approved a total of $6 billion in new investments in Nigeria's oil and gas industry, the generally reliable BusinessDay Online site reported.

The news must have been welcome to Nigerian President Olusegun Obasanjo, who is in Davos, Switzerland at the prestigiuous World Ecionomic Forum to make the case for his country as a safe haven for investments from Europeans, Asians and Americans despite a growing militancy among ethnic Ijaws in the Niger Delta, who have taken hostages and blown up pipelines and flow stations belonging to Royal Dutch Shell in recent weeks, and also robbed an Agip office of some $38,000 in cash three days ago. The militants have vowed to attack more oil facilities if demands for the release of the disgraced Bayelsa State governor and an Ijaw militia leader are not met.

For investors, the intiguing portion of a story on the matter was that Nigerian oil minister and OPEC President Dr. Edmund Daukoru is going to India in the first week of February for a three-day visit intended to "smooth things over" with the Indians, who balked at allowing its national ONGC oil company to invest $2.3 billion in an offshore concession owned by Nigeria's former defense minister.

While that deal is not back on track - a Chinese government-owned company seized the opportunity almost as soon as India pulled out - Indian money will apparently be building a refinery and other badly-needed infrastructure projects in Nigeria.

Shareholders of ERHC Energy may also wonder if Daukoru may support an Indian bid to take over ERHC during the visit.
ERHC has already teamed up with Essar Oil of India in one ill-fated project, and Essar or another Indian company could do so in a buy-out of ERHC's 30 percent interest in the entire Joint Development Zone.

January 27th, 2006
India to invest $6bn in Nigeria’s oil & gas sector

The Indian government may have relaxed its opposition towards Indian companies investing in Nigeria's oil and gas sector as the companies are now set to invest $6 billion (about N798 billion) into the sector.

Indian High Commissioner to Nigeria Subramaan Viswanathan disclosed this in Lagos yesterday during India’s 57th Republic Day anniversary celebration.

The Indian government had earlier turned down requests of some of its companies to invest between $1 billion and $2billion in the energy sector on the grounds that it did not consider the investment good enough.

The Oil and Natural Gas Company of India (ONGC) was to take up 45 percent equity stake in OPL 246, Akpo Field which belongs to South Atlantic Oil Company.

The ONGC last year bidded for some oil blocs in Nigeria and it is still showing keen interest in the sector.

Viswanathan who disclosed the new investment, said that a bigger body, the Oil and National Gas Company of India-Mittal Energy Limited (OMEL) was discussing with the Ministry of Petroleum in Nigeria to smoothen out rough edges prior to the planned investment.

He added that a memorandum of understanding (MoU) had been signed between the two countries concerning many areas of cooperation.

Following the development, the Minister of State for Petroleum, Edmund Daukoru, has concluded plans to visit India between February 2 and 5. The essence of the trip is to have some discussion with the Indian government with the aim of smoothening some gray areas.

He said the OMEL group, which includes Mittal, the biggest steel conglomerate in the world, would build a private refinery in the country, most probably in Port-Harcourt, and two power projects. Viswanathan said the details were being worked out between OMEL and the Nigerian Ministry of Petroleum.

The Indian high commissioner also spoke about the level of trade between Nigeria and his country. According to him, total trade between the two countries amounted to about US$3.0 billion, (about N399 billion) in 2005.

He said Nigeria's export, mostly crude oil to India during the period, was about $2.5 billion, (about N332.5 billion), while India's export to Nigeria was between $500-600 million, (about N66.5 to79.8 billion) in 2005.

Viswanathan predicts that trade between the two countries would increase by 10 percent this year.

He recalled that India opened up her economy sometime in 1991, getting more absorbed into the global system.

It will be recalled that the Austrian government is making a commitment of $5 billion, (about N665 billion) in the oil and gas sector of the economy.

The combination of both the private and public sectors from Austria’s plans to invest in the construction of a 2000 megawatt electricity plant with gas infrastructure, one million tons fertilizer plant, integrated Liquefied Petroleum Gas (LPG) or cooking gas bottling plant and two or three trains of LNG plants as well as investment in coal mining.

He however said that India's economy was predicted to become the third largest economy in the next 25 years.

According to him, India is one country which some years ago found it difficult to get enough grains to feed its people; but the situation is now reversed as the country has become a major exporter of food grain.

India, according to him is a business friendly country and she believes the whole world can work together.

Report Of New Hostage-Taking Was Wrong, Guardian Admits

The Guardian of Nigeria admits in Friday's editions that its Thursday report that four more hostages had been taken from a Royal Dutch Shell facility was in error.

Four Royal Dutch Shell hostages, who include an American, a Briton, a Honduran and Bulgarian, expect to be released soon, negotiators say.
Source: The Punch On The Web
The report was picked up by ERHC On The Move and added as one paragraph to our opening commentary on a German study of African terrorsim.

Here is the Guardian's front-page note on the non-event:

No fresh hostage-taking

INFORMATION and National Orientation Agency Minister, Frank Nweke (Jnr.), has refuted the report that four additional hostages have been held in the Niger Delta.

Speaking in Abuja yesterday, the minister said that a media report suggesting that more hostages were seized by militants could not be true since information gathered from all the appropriate quarters in the area were to the contrary.

According to him, the Federal Government, which has been in touch with the management of the Shell Petroleum Development Company (SPDC) and the state governors in the affected areas, can confirm that no such incident took place.

While expressing worries about the source of such reports, he advised journalists to always cross-check their facts and also avoid any form of sensationalism in reporting sensitive issues that touch on the general interest of the nation and the people.

The whole matter of hostage-taking, he added, will come to a fruitful conclusion in about a few days.


Thursday, January 26, 2006

Iran Threatens To Shut Straits Of Hormuz, Right-Wing NewsMax Says

A right-wing Website called NewsMax is reporting this afternoon on what isays was an original report on Tuesday from Haaretz, a right-wing Israeli newspaper, that says the nation will shut down the strategic Straits of Hormuz if European nations persist in their threats to impose sanctions over Iran's alleged development of nuclear fuel and weaponry. No Haaretz story could be located, however.

This north-looking view shows the Straits of Hormuz (25.5N, 56.0E) which connects the Persian Gulf, left, with the Gulf of Oman, right. The mainland of Iran is at the top, north, and the Musandam peninsula lies to the south. Click on the photo for a larger image.

Source: www.dataxinfo.com

The threat to shut down the Strait of Hormuz would imperil a quarter of the world's oil supply, and Iran is globally acknowledged as the country that is owner of the straits.

It is unclear whether the NewsMax citation is credible. The alleged Haaretz story was inaccessible Thursday evening, even though its Tuesday Website can be accessed fron a link on the front page. The Tuesday site has no articles on the Straits of Hormuz, although several on Iran.

The news, if further confirmed, is likely to send oil prices higher. In addition, a report on National Public Radio this morning mentioned the possibility that Iran could close down the strategic waterway. That story appears after the piece from NewsMax that was allegedly based on a Haaretz story:

Here is the NewsMax story:

Thursday, Jan. 26, 2006 9:24 a.m. EST
Iran: We'll Shut Down Straits of Hormuz

A senior Iranian official is threatening to close the Straits of Hormuz using military force, which would effectively shut down the Persian Gulf oil supply - if European supports economic sanctions against Iran in a bid to halt Tehran's nuclear program.

"If Europe does not act wisely with the Iranian nuclear portfolio and it is referred to the U.N. Security Council and economic or air travel restrictions are imposed unjustly, we have the power to halt oil supply to the last drop from the shores of the Persian Gulf via the Straits of Hormuz," said Mohammed-Nabi Rudaki, deputy chairman of the Iranian parliament's National Security and Foreign Policy Commission.

According to the Israeli News service Haaretz, which first reported the threat on Tuesday based on an Iranian news account - this is the first time an Iranian official has publicly issued a military threat.

Twenty-five percent of the world's oil production passes through the Straits of Hormuz, which connects the Persian Gulf to the Indian Ocean. If Iran were to carry out such a threat, other big oil producers in the region, such as the United Arab Emirates and Kuwait, would be unable to export oil.

Raduki also warned that his country might resign its membership in the International Atomic Energy Agency and withdraw from the Nuclear Non-Proliferation Treaty.

Here is the report from Eric Weiner of National Public Radio that was aired this morning across the United States:

Iran's Other Potential WMD: Crude Oil
by Eric Weiner

“We've already seen that Iran is willing to talk about using oil as a weapon, and I think the markets are taking that threat seriously.”
Ian Bremmer, president of the Eurasia Group consulting firm

Day to Day, January 26, 2006 · For the past few weeks, Iran has tweaked the noses of world powers -- especially the United States -- as it continues its pursuit of nuclear power. Iran insists its nuclear program is strictly for peaceful purposes. The U.S. and its European allies worry that Iran plans on developing nuclear weapons.

It's not only nuclear weapons, however, that the world is worried about. Iran has another weapon at its disposal: oil. Iran's "oil weapon" may not be as worrisome as a nuclear weapon, but experts say it poses a very real and immediate threat to the world economy.

Iran is the world's fourth-largest oil producer. Every day, it exports more than two million barrels of crude -- twice as much as Iraq. Any move by Iran to cut off or curtail its oil exports would quickly translate into higher oil prices worldwide.

"Oil markets are already reacting," says Ian Bremmer, president of the Eurasia Group consulting firm. "We've already seen that Iran is willing to talk about using oil as a weapon, and I think the markets are taking that threat seriously."

Analysts say that should Iran act on its threat to unleash its "oil weapon," oil prices could skyrocket to $100 a barrel, or about $4 a gallon at the pumps. While that is clearly not an appealing prospect, neither is the prospect of a nuclear-armed Iran, say U.S. officials and lawmakers. On the on CBS political talk show Face the Nation, Sen. John McCain (R-AZ) put it plainly: "If the price of oil has to go up, then it's a consequence we would have to suffer."

The question, analysts say, is whether such a price hike would be short-lived or long term. The current state of the global oil market gives Iran a stronger hand. These days, countries like China and India are thirsty for oil, and there isn't a lot of surplus oil sloshing around on the global market.

In the past, the United States could rely on North Sea oil, for instance, to make up for shortfalls. Today, it must turn to nations like Venezuela and Nigeria. The recent hurricanes in the Gulf of Mexico have also hurt oil production. "Most of these supply situations are fraught with some kind of peril," says Frank Verrastro, head of the energy program at the Center for Strategic and International Studies.

But would Iran really follow through on its threat to unleash its "oil weapon?" After all, the government of Iran derives half of its revenue, and 80 percent of its hard currency, from oil sales. By cutting off those sales, wouldn't Iran be committing economic suicide?

Most experts say a complete cutoff of Iranian oil is unlikely -- but "there are a lot of things that the Iranians can do short of cutting off oil which are going to impact gas prices in the United States," says Ian Bremmer of the Eurasia Group. For instance, he says, Iran could threaten the movement of oil tankers in the Straits of Hormuz, a vital waterway that it controls.

"The Iranians can ramp this up or back as they're pressed," says Bremmer. "And thus far, they have shown every inclination to do precisely that."

3 Nigerians Arrested In Hostage-Taking Case; Obasanjo, In Davos, Says Kidnap Talks 'Progressing,' Oil Industry 'Not In Crisis'

Three Nigerian men were arrested Thursday by authorities there in connection with the recent kidnapping of four men from Royal Dutch Shell's offshore Beneside platform, a Lafayette, La., tv station said this afternoon.

Since the kidnapping and a series of terror attacks on flow-stations and pieplines,
Royal Dutch Shell and Agip, Italy's national oil comapny, have taken steps to evacuate many of their workers from the Niger Delta region where the attacks and kidnappings have occurred.

However, according to early editions of today Guardian of Nigeria, four more men were kidnapped yesterday, also from a Shell platform, the paper said. That news could not be confirmed, and the Guardian's front-page link to it was broken.
Here is the story from KFLY Channel 10 in Lafayette, the hometown of hostage Patrick Landry:

January 26, 2006
>3 Men Arrested in Nigeria on Kidnapping Charges

New details are being released Thursday afternoon on an Acadiana native who is being held hostage in Nigeria.

Three men allegedly linked to a Nigerian militant group claiming to hold four oil workers hostage have been arrested.

A police spokesman says the men could assist in locating the kidnappers.

Acadiana native Patrick Landry was one of four who was kidnapped at a Shell Oil platform earlier this month.

We'll have more on this story on the evening editions of Eyewitness News.

Meanwhile, the well-regarded Stratfor Intelligence Group published a brief note from the World Economic Forum in Davos, where Nigerian President Olusegun Obasanjo spoke to the press today:

Nigeria: Talks On Hostages Progressing>
January 26, 2006 12 16 GMT

Talks with militants that are holding an American, a Briton, a Bulgarian and a Honduran oil worker hostage in the Niger Delta are making progress, Nigerian President Olusegun Obasanjo said Jan. 26. Obasanjo, who is attending the World Economic Forum in Davos, Switzerland, added that he is not concerned that the incident would impact investment in the country. He declined to speculate about when the hostage crisis might be over.

The Chinese government-controlled ChinaView Website, meanwhile, say Obasanjo is seeking to debunk widespread perceptions that Nigeria's oil industry is in crisis. Their report is also from Davos, but used a Lagos, Nigeria dateline:

Nigeria's oil industry not in crisis: Obasanjo

www.chinaview.cn 2006-01-27 02:34:41

LAGOS, Jan. 26 (Xinhuanet) -- Nigerian President Olusegun Obasanjoon Thursday in Davos, Switzerland, said the recent violence on oil facilities and abduction of four oilmen in the country's Niger Delta did not amount to having a crisis in its oil industry.

According to the official News Agency of Nigeria, Obasanjo said his government was already taking effective steps to contain the situation in the delta region, where the majority of Nigeria's oil is produced.

"I do not believe that our oil industry is under threat. This is an aberration. It will come and go. There is an element of terrorism in this and you cannot say we should give in to terrorism," Obasanjo was quoted as saying.

He said his administration was fully aware of the global importance of the hydrocarbon resources of the Niger Delta and the Gulf of Guinea and would do everything possible to guarantee their security.

The president said although his government was in contact with the militant group claiming responsibility for recent criminal acts in the Niger Delta, it had not offered them any "deal."

On January 11, four foreigners working for Royal Dutch Shell were taken hostage by an armed group in the Niger Delta region. Local officials had expressed optimism that the four could be released this week.

Nigeria is the biggest oil producer in Africa with a daily output of 2.5 million barrels, while Shell accounts for half of the country's oil production, but the situation in the country's oil regions in the south is turbulent.

In the oil-rich Niger Delta, local people accuse oil majors of caring about only extracting oil and doing little to help them develop the area. As a result, they frequently attack oil facilities and commit other forms of violence to blackmail the oil companies operating in the area.

German Security Experts Offer 'Wake-Up Call' On African Terrorism

My good friend, Brig. Gen Dieter Farwick, the former head of Germany's military intelligence operation, now publishes a newsletter called World Security Network that is a reliable source not only of good fresh intelligence but of geopolitical strategy to fight it.

With his permission, I am publishing his most recent newsletter, which focuses on Africa in general and Nigeria in particular. It should be noted that the newsletter was published on Jan. 18, 2006, just before the recent round of assaults, kidnappings and terrorist bombings began in the Niger Delta. The World Security Network briefing here was not only timely and prescient, but provides some important strategic guidelines for the successful prosecution of fundamentalist Islamic terrorism.

With no further ado, here is World Security Network's Jan. 18 newsletter:

World Security Network Foundation, New York, January 18, 2006

Dear Joe Shea,

The world’s attention is drawn to the current major crises in the so-called “Broader Middle East,” including the “arc of instability” from Marrakech to Bangladesh – extending to the east to North Korea as well as extending to the Caspian and Caucasus region. That people throughout the world and relevant governments focus on these crises is quite understandable but dangerous. Almost daily, we learn a lot about terrorist and extremist activities in these regions.

It might well be that the world will once more receive a wake-up call – this time from Africa. We cannot wait until the problems in Afghanistan, Iraq and Israel/Palestine have been solved. Then it might be too late to avoid a new theater of war on terrorism. By then the “cancer named terrorism” might have spread and strengthened its metastasis in the body of Africa.

Why is Africa so low on the international agenda? The flood of bad news coming from Africa – Somalia, Sudan, Zimbabwe, Congo, Eritrea etc – has created a mixture of frustration, resignation, fatalism and hopelessness in the Western world. Poor results after decades of foreign aid, news of about 30 million HIV/AIDS infected people and the millions of orphans caused by this epidemic, information about corruption and poor governance in most African states as well as ongoing intrastate and interstate conflicts caused by ethnic and religious conflicts and the fight for strategic resources dominate the headlines. Good news is hard to find: Botswana and the Republic of South Africa seem to be the only lighthouses in Central and Southern Africa.

There are initiatives from the G8, the UN, the EU, NATO and the US – to name a few – to support Africa via the African Union and bilaterally, but so far these efforts are obviously insufficient to achieve remarkable progress. Support of Africa does not mean that more money should just be poured into corrupt systems. Foreign aid should go into concrete projects tightly controlled by the donors. Foreign aid should help and enable African people to help their countries.

Time works to the advantage of international terrorism and against world security. The number of failed states – serving terrorists as safe havens – is increasing. Poor governance and poor leadership, corruption, social and economic problems create the breeding ground for terrorist organizations and their recruitment of young people. This is combined with the spreading Islamization of Africa.

Islam is a priori not equal to terrorism.
But there is always a minority within the Islamic community in favor of extremist and terrorist activities. The terrorists in Africa cooperate with those involved in organized crime. Both benefit from the richness of raw materials that they trade illegally, gaining a lot of money. Africa will gain more importance as a world supplier of crude oil, gas and strategic raw materials.

Terrorism in Africa – including piracy – is a threat to the vital interests of Africa and the rest of the world. Western governments have to devote human, intellectual, economic and financial resources to immediately start confidence building measures and to install a common early warning system enabling crisis prevention.

With this newsletter, we offer an in-depth analysis of a young German academic whose studies focus on Africa. WSN totally agrees with two of his main recommendations:

“It therefore must be a key priority to Europeans and Americans alike to maintain more control over Africa’s economy and to promote border control by the African state authorities.”

“Development assistance is a necessary prerequisite for peace and freedom in Africa. It is furthermore indispensable if the West wants to win the war on hearts and minds.”

Dieter Farwick
Global Editor-in-Chief

Why Africa matters
Terrorism in Africa - the forgotten continent once more?
written by: Dustin Dehéz

“As terrorists operate flexibly and internationally, so must we.”
The G8 on the 8th July 2005

Rising Stakes in Africa
During the 1990s, after the end of the Cold War, Africa seemed to have become what some observers have called “the forgotten continent“. After 9/11, international attention focused on the Middle East as a main hotspot of new conflicts. For a moment, though, there seemed to be a window of opportunity, a chance that Africa might surface on the international agenda again. General Tommy Franks argued in a dialogue with Senator Bob Graham:

“We can finish the job in Afghanistan if we are allowed to do so. And there are a set of terrorist targets after Afghanistan. My first priority would be Somalia. There is no effective government to control the large number of terrorist cells.“1

One of the reasons why Africa deserves international attention is actually the war on terror. For international terrorist networks Africa is a main target; it serves as a safe haven and provides an effective financial basis with its large networks of informal economies. Africa has furthermore slowly emerged as one of the key strategic fields of international resources.

The oil in the Gulf of Guinea is of major interest to the United States and Europe alike. The U.S. currently imports some 16% of its total oil imports from the African continent, Nigeria being one of its five most important oil suppliers. During the next four or five years these figures will rise substantially to some 25%. It's not only oil that is driving the interests of nations and corporations, its also other raw materials like coltan for relatively new industrial products, like mobile phones.

The rising importance of African resources for the United States and Europe is particularly worrying as Africa had become what some have called the “underbelly for transnational terrorism”.2 Largely unnoticed major parts of Africa have been the scene for Islamisation since the late 1970s. It is this mixture of strategic resources, Islamisation, and state weakness that makes Africa so an inviting target for terrorism and terrorist networks.

Terrorism in Africa

The fact that terrorism has emerged as one of the most dangerous threats to the West was by no means a surprise. Back in 1995 the NATO Secretary General Willy Claes warned:
“Islamic militancy has emerged as perhaps the single gravest threat to the NATO alliance and to Western Security

The threat by fundamental Islam in Africa has to be taken seriously.
Source: http://worldsecuritynetwork.com

In sub-Saharan Africa Islam has advanced significantly in the last couple of years. Some analysts fear that Niger may break up; into a Muslim dominated North and a Christian dominated South. Ethiopia, Nigeria and Senegal also have strong Muslim minorities.4 Some analysts go as far as claiming that there are already centres of Islam in Africa, considering the tropical zone along the Gulf of Guinea, the Sudanese Nile region and the East African coastal strip as such centres of Islam.5

There are strong Muslim minorities in Mocambique, Uganda, the Central African Republic (CAR), Liberia, Burkina, Tanzania, Sierra Leone, Cameroon and Côte d'Ivoire. In some other countries in Sub-Saharan Africa Islam is already a majority religion: Djibouti, Guinea, Mali, Niger, Nigeria, Senegal and Somalia.6 In Nigeria for instance some twelve provinces introduced the Shari’a as basic law and Osama bin Laden called it one of the countries he wanted to “liberate”.7

Somalia serves a safe haven for terrorist groups like Al-Itihaad al-Islamyia, which is linked to Al-Qaeda. This particular terrorist cell is held responsible for the attacks on U.S. soldiers during the U.N. mission Restore Hope, which left 18 U.S. soldiers dead and about 75 wounded.8

Islam is one index of identity, alongside ethnicity and regional loyalties and so far African Islam has been relatively moderate. But as David McCormack recently pointed out, African Islam is slowly turning into Islamism in Africa.9

In West Africa one of the major reasons for the instability of the coastal strip and its countries like Nigeria, Sierra Leone, Côte d'Ivoire, and Liberia is the divison into a Christian-dominated South and a Muslim-dominated North. More aggressive interpretations of Islam are promoted by Saudi Arabia and Iran, through building of mosques, financial support for the hajj and the provision of education. The presence of the Muslim World League and the World Assembly of Muslim Youths in East Africa has had a radicalising influence on the local population.10 The threat by fundamentalist Islam in Africa has to be taken seriously.

Three years before 9/11, Africa was targeted by Al-Qaeda. The attacks on the U.S. embassies in Dar-es-Salaam and Nairobi caused 224 casualties, including 12 Americans. Since 1996 the number of international terrorist incidents in Africa increased dramatically. While in 1996 eleven incidents had been reported, the number exploded to fifty-five incidents in 2000.11

Although Africa is comparatively less effected by international terrorism (although it experienced some of the bloodiest attacks)12 that does not indicate that it deserves less attention. Quite on the contrary, it should be one of the major focuses in the struggle against terrorism.

The core problems the international community has to face on the African continent are:

  • ungoverned parts of Africa, especially in failed states, which often serve as safe haven for terrorists and other states that serve as transit hubs to the Middle East, like Kenya;

  • conditions of conflict that may lead to more alienation from traditional identities and thus providing breeding ground for more radical forms of Islam;

  • that nearly 40% of Africa's total population are already Muslim, while a more fundamentalist version of Islam is promoted with financial backing from Saudi Arabia and Iran;

  • that widespread guerilla warfare might turn into urban terrorism,13;

  • that informal economic structures might serve as an ideal environment to money laundering,14;

  • and finally that Non Governmental Organisations (NGOs), donors, and other Western institutions might provide an easy and inviting target for international terrorism.15

Given this background one might wonder, why Africa did not experience more terrorist attacks in the past.16 The main reason is that failing states provide a suitable environment for sub-national terrorism. But sub-national terrorism does not count as international terrorism, that has, per defintionem, to affect more than one country.17

While weak and failed states with their lack of territorial control make it easier for opposition movements or potential terrorist organisations to seize power. Groups that do not have the ability to control territory – as is the case in most countries in the Middle East – tend to terrorist strategies. But as long as these opposition groups maintain territorial areas of control they do not tend to terrorist attacks; they prefer what some analysts label guerilla warfare.18 Guerilla warfare is by no means less brutal than other forms of terrorism; the Lord's Resistance Army (LRA) in Uganda and the Revolutionary United Front (RUF) in Sierra Leone proved that their guerilla warfare is indeed yet another form of terrorism.

Collapsed US Embassy Building in Nairobi, Kenya, August 7, 1998.

The African Union's regional instrument to counter terrorism is the Algiers Convention on the Prevention and Combating of Terrorism established in 1999.19 It defines terrorism as a form of international crime: a result of the fact that Africa serves as a suitable and ideal environment to finance terror. African states realised back to two years before 9/11 that terrrorism exploits the differences in governance, porous borders, and illegal and informal trade networks.20

After the attacks on the Twin Towers and the Pentagon the United Nations Security Council adopted resolution 1373.21 This resolution was binding and called for the suppression of the recruitment, financing and supply of terrorist networks (although many African governments committed themselves to the war on terror, they lack the means to effectively do so). In the same resolution the United Nations Security Council was aware that one of the major problems is the connection between terrorism and international organised crime. This especially concerned Africa, where drugs and arms trafficking and informal economic structures are prelevant.22

Strategic Resources and International Terrorism

Africa with its huge networks of informal economy is furthermore a suitable environment for terrorist groups to finance themselvs. There are rumours that Al-Qaeda profited from the informal economic structures in Africa. Although there is not yet enough evidence, many analysts think its plausible that Al-Qaeda was involved in the diamonds trade in Sierra Leone and in gems trafficking in Tanzania, thus prolonging tensions and conflicts.23 Some observers even argue that Al-Qaeda owned up to nearly 15 vessels for any kind of transport, using Somalia as an operational basis. Additionally there are also reports that Al-Qaeda was involved in Gold smuggling from Pakistan to Sudan.24

What makes Africa so attractive and vulnerable to terrorists and international crime is its resources. Especially in West Africa and in the Gulf of Guinea there are vast amounts of oil. Gold, iron ore, bauxite, diamonds, and uranium attract not only big Western companies but also illegal and informal entrepreneurs. In Central Africa gold, iron, oil, diamonds do the same; coltan is also available, which is especially important for those industries producing mobile phones and other electronic equipment.25

As the United States want to increase the African part of their oil supplies, more attention will be drawn to Nigeria, Chad, Congo (Brazzaville), Angola, Equatorial Guinea, Gabon and Sao Tomé e Principe.26 Some 25% of overall U.S. oil imports will come from Africa within the next four or five years.27 But the security sector in Africa is weak and on-shore as well as off-shore oil production is a very inviting target, especially in Nigeria.

In the past mineral resources played a key role in financing civil war and different militias. Illegal diamond trade was a major source to finance the war between the Angolan government and the UNITA.28 The instability in the Democratic Reublic of Congo is largely due to the attractiveness of a vast amount of mineral resources in the region. Their illegal exploitation is a central way of financing for different milita groups in the whole country.

One central precondition of illegal exploitation are porous borders. The smuggling of diamonds and other raw materials across the borders in central Africa is a key obstacle to freedom and peace in the region. As long as illegal trade is that simple providing stability in the region will be very difficult even for democratic states; and missions to provide stability in the region are designated to fail, as attacks on MONUC soldiers in the province of Ituri in early 2005 showed. It therefore must be of a key priority to Europeans and Americans alike to maintain more control over Africa's economy and to promote more border control by the African state authorities.

A Change in Policies?

After 9/11 the United States reviewed its foreign and development policy. One basic conclusion was that despite all international aid and financial injections most development countries in Africa simply did not experience development. The National Security Strategy set up in 2002 was the first attempt to counter that challenge. No development in development countries however did not suggest that development aid was futile, but rather that development aid had to be conducted in a different way.

The new National Security Strategy marked the first time the United States began to take the threat of failed and weak states seriously. The U.S. tried to tackle the issue and committed itself to more development aid but at the same time made it part of their National Security Agenda. Development policy since then has a goal: Improving security for the United States and their allies. It was no longer a senseless expenditure to prove the selflessness of Western nations but was turned into an important means of foreign and security affairs, thereby giving it a much higher priority in overall political affairs.

However, until now this change has only been rhetorical. State failure and state weakness in Africa is still a widespread problem. Somalia is an outstanding case in this regard. It experienced a military coup d’etat in the early postcolonial period, was an ally to both the Soviet Union and the United States, entered a bloody civil war, followed by international intervention and withdrawal and the secession of a major part of the country, of what is now called Somaliland.

But renewed efforts by the African Union and the regional body, the Intergovernmental Authority on Development (IGAD) go without significant support of the United States. State failure is an imminent threat in other African countries as well, as in Nigeria and Eritrea.29 There is a whole volatile region from Liberia to Nigeria in the Gulf of Guinea where state failure is a common threat, thus preparing a potential breeding ground for terrorism in the medium future. But despite the rising significance of these regions for their natural resources initiatives to promote peace, stability and democracy have been limited.

Although after 9/11 the United States released a new doctrine – the U.S. now considers Kenya, Nigeria, Sudan and Ethiopia as key countries of their interest in Africa – in the very same doctrine the United States stated that no U.S. troops will be dispatched to the African continent in peacekeeping missions.30 The same goes for the G8 countries: Although they have recognised that “Sustained and better co-ordinated support for the African Peace and Security Architecture and for post-conflict is required”31, they have not yet allocated the necessary financial support nor have they increased their diplomatic activity.

Recommendations – Avoiding a deja vu

When in 1989 the Soviet Union withdrew from Afghanistan not all Mujahedin stayed in Afghanistan, many wanted to continue the fight for radical Islamisation elsewhere and subsequently went to Algeria or Somalia. It could happen all again, as soon as Iraq is more stable foreign fighters might again focus on other possible targets and as in the early 1990s they will surely try to penetrate Africa and make use of its state weakness. With a costly war in Iraq still looming what could the West, the United States and the G8 do to prepare itself and Africa for the upcoming battle?

  • The Joint Task Force Horn of Africa is a very good start, but its mandate is absolutely insufficient. Ships must be boarded if they are suspicious of carrying weapons or terrorists, not if their crew permits it. It is striking that despite the presence of a maritime force piracy at the Horn of Africa is still a widespread problem and is even increasing. The current mandate should be revised and allow for extended policing rights. In doing so the UN arms embargo against Somalia could be enforced, efforts of state-building in Somalia would be promoted and piracy would be better responded to.

  • Programmes for the training of African peacekeepers must be enhanced and united under one common umbrella. The current practice that France, Britain and the United States are each running their own programme for training is provoking a latent rivalry and is used as ammunition by critics of the West and the media in Western Europe to illustrate what they see as a struggle of these three countries for more influence in the region. The G8 countries committed themselves to the training of 75.000 peace keepers, but streamlined and united within the framework of a NATO mission these programmes could be more effective.32

  • Development assistance is a necessary prerequisite for peace and freedom in Africa. It is furthermore indispensable if the West wants to win the war on hearts and minds, but instead of funding African governments the focus should shift to infrastructural projects. More and better roads would not only allow foster economic development, but would furthermore enable better state integration and would as a result strengthen weak states.

  • The major obstacle to lasting peace in Africa is the relatively easy access to small arms and light weapons. An estimated 100 million small arms are currently on the markets throughout Africa. Countering arms smuggling goes hand in hand with more effective border control. The capabilities of African states to monitor their own borders must be enhanced significantly and a new small arms regime must be imposed to counter the spread of small arms. Only if the prices for weapons and ammunition are increasing sharply the price for waging civil war might be too high for warlords throughout the continent.

  • The G8 rightly pointed out that progress in Africa “depends above all on its own leaders and its own people.”33 Good governance is therefore a key necessity for development and for lasting peace and should be promoted by the West.

  • Islamisation of East Africa and Nigeria is a particularly worrying development. The United States and the European Union must foster initiatives to counter increasing Saudi and Iranian influence in East Africa. The building of mosques, financial support for the hajj and providing education has created a fertile ground for radical Islam in major parts of East Africa, particularly in Kenya, especially Zanzibar, Somalia and Tanzania. What is needed is a combined approach including development assistance and support for more liberal Muslim clerics.

  • The promotion of safety for critical infrastructure in Africa is perhaps the most urgent challenge to the West. Not only borders are largely uncontrolled, even crucial infrastructures like harbours and airports are in need of tightened control. The international community should strengthen and support African capabilities to monitor movements on these critical infrastructural networks.

1 Tommy Franks to Senator Bob Graham. This quote appeared on the H-Mideast Politics discussion network (http://www.h-net.msu.edu)
2 Mentan, Tatah: Dilemmas of Weak States. Africa and Transnational Terrorism in the Twenty-First Century. Aldershot, Burlington: Ashgate, 2004, p. 2.
3 Warraq, Ibn: The Enemy: "Terrorism?" In: African Geopolitics, 5 (Winter 2001/2002), pp. 99-113.
4 Belmessous, Halène: The Progress of Islam in Sub-Saharan Africa. In: African Geopolitics, 5 (Winter 2001/2002), pp. 77-83.
5 Mair, Stefan: Terrorism and Africa. On the Danger of Further Attacks in Sub-Saharan Africa. In: African Security Review, 12 (1/2003), pp. 107-110.
6 Guérivière, Jean de la: The Different Faces of Black Islam. In: African Geopolitics, 5 (Winter 2001/2002), pp. 69-76.
7 Herbst, Jeffrey/Mills, Greg: Africa and the War on Terror. In: South African Journal of International Affairs, 10 (2/2003), pp- 29-39.
8 Cornwell, Richard: Short Commentary on Somalia: Plus ça Change…? Institute for Security Studies Situation Report, 19/1/2005; Otenyo Eric E.: New Terrorism. Toward an explanation of cases in Kenya. In: African Security Review, 13 (3/2004), pp. 75-84; Nielinger, Olaf: Afrika und der 11. September 2001. In: Afrika Spektrum, 36 (1/2002), pp. 259-272, and Nord, Antonie: Somalia und der internationale Terrorismus: Wie stark sind islamistische Fundamentalistin am Horn von Afrika? In: Afrika im Blickpunkt, (1/2002), pp. 1-9.
9 McCormack, David: An African Vortex: Islamism in Sub-Saharan Africa. The Center for Security Policy. Occasional Papers Series, No. 4, January 2005, p. 3.
10 McCormack, David: An African Vortex: Islamism in Sub-Saharan Africa. The Center for Security Policy. Occasional Papers Series, No. 4, January 2005, p. 6.
11 Hough, Mike: New York terror: The implications for Africa. In: Africa Insight, 32 (1/2002), pp. 65-70.
12 Cilliers, Jakkie: Terrorism and Africa. In: African Security Review, 12 (4/2003), pp. 91-103.
13 Clapham, Christopher: Terrorism in Africa: Problems of Definition, History and Development. In: South African Journal of International Affairs, 10 (2/2003), pp. 13-28.
14 Wannenburg, Gail: Links between Organised Crime and Al-Qaeda. In: South African Journal of International Affairs, 10 (2/2003), pp. 77-90.
15 The World Food Programme (WFP) and Medeciens Sans Frontieres had been under attack in Africa in 2001. Cilliers, Jakkie: Terrorism and Africa, p. 99.
16 The report “U.S. patterns of Global Terrorism 2003” for instance counted twelve terrorist organisations active in Africa, while eight terrorist organisations have been counted active in Northern Ireland alone. US Patterns of Global Terrorism 2003, pp. 113-160. In general on the matter: Krueger, Alan B./Laitin, David D.: “Misunderestimating” Terrorism. The State Department’s Big Mistage. In: Foreign Affairs, 83 (5/2004), pp. 8-13.
17 Cilliers, Jakkie: Terrorism and Africa.
18 Clapham, Christopher: Terrorism in Africa.
19 Sturman, Kathryn: The AU Plan on Terrorism. Joining the Global War or Leading an African Battle? In: African Security Review, 11 (4/2002), pp. 103-108.
20 The United States created the Pan-Sahel Initiative (PSI) to counter the effects of porous borders and to help the governments of Mali, Mauritania, Niger and Chad to control their borders. US Patterns of Global Terrorism 2003.
21 Cilliers, Jakkie: Terrorism and Africa.
22 Malan, Mark: The Post-9/11 Security Agenda and Peacekeeping in Africa. In: African Security Review, 11 (3/2003), pp. 53-66.
23 Mair, Stefan: Terrorism and Africa
24 Wannenburg, Gail: Links between Organised Crime and Al-Qaeda. Some reports suggest that the Task Force Horn Of Africa that is currently patrolling the waterways at the Horn of Africa is tracking more than twenty ships believed to be controlled by Osama bin Laden’s Al Qaeda. http://allafrica.com/stories/printable/200511070308.html.
25 Mair, Stefan: Die regionale Integration und Kooperation in Afrika südlich der Sahara. In: APuZ, B 13-14 (2002), pp. 15-23.
26 Basedau, Matthias/Mehler, Andreas: Strategische Ressourcen in Subsahara Afrika. Konfliktpotenziale oder Friedensgrundlagen? In: Internationale Politik, 58 (3/2003), pp. 39-46.
27 Kansteiner III, Walter: Political Reforms are Essential in the Fight against Terrorism. In: African Geopolitics, 5 (Winter 2001/2002), pp. 31-35.
28 Dietrich, Christian: Blood Diamonds. Effective African-based Monopolies? In: African Security Review, 10 (3/2001), pp. 99-114.
29 In the case for Eritrea, see: West, Deborah L.: Terrorism in the Horn of Africa and Yemen. Program on Intrastate Conflict. Belfer Center for Science and International Affairs. Harvard University, 2005.
30 Cilliers, Jakkie: Peacekeeping, Africa and the Emerging Global Security Architecture. In: African Security Review, 12 (1/2003), pp. 111-114.
31 The G8 Progress Report by the Africa Personal Representatives on implementation of the Africa Action Plan, p. 7.
32 The G8 Gleneagles Communique, § 8 and 9.
33 The G8 Gleneagles Communique, § 5.

Wednesday, January 25, 2006

Memon's Abrupt Departure Meets Good Reviews From ERHC Shareholders

The unexpected news that ERHC Energy CEO Ali Memon - former president of Marathon Oil operations in Equatorial Guinea - has left ERHC Energy on January 20 appeared in an 8-K report filed today with the Securities Exchange Commission and met with a largely positive response from shareholders.

While there are many possibilities raised as to why Memon has departed, one that was not raised is his role as Marathon's president in Equatorial Guinea, where his company along with ExxonMobil, Devon Energy, Noble Energy and others has been the object of a two-year investigation of bribery and corruption that violated the Foreign Corrupt Practices Act It's our feeling that this probe is going to suddenly turn around and bite someone in the butt very soon.

The investigation, apparently being slow-rolled by oil-state Republican Sen. Ted Stevens of Alaska, has produced little but publicity since it began.

Memon's replacement is an American-educated lawyer from Germany whose credentials are still being examined by shareholders who want to learn more about him.

Walter Brandhuber is said to have 23 years of experience in the oil and gas industry nd won his LL.D. from my alma mater, the University of Oklahoma, in 1982. He was an executive at CRA International, also based in London and dsscribed as "an international consulting firm based in London/Amsterdam and specialising in market entry, oil-and-gas acquisition strategies and business development."

That background has excited speculation on both the I-Hub and Raging Bull boards that Brandhuber may have been brought in to engineer an Addax Petroleum buyout of the company from current CEO Sir Emeka Offor.

While there is no evidence that is the case, the logic is flawless, as Mr. Offor has had difficulty of late on several fronts, including a $1 million judgment against him and the failure of his African Express Bank to join a viable consortium under the Nigerian Central Bank's recent consolidation initiative, as well as resistance from the Sao Tome and Principe government and the departure of Devon Energy and Noble Energy from two of the five substantial equity interests awarded to him in the Nigeria and Sao Tome Principe Joint Development Zone.

Below are the 8-K filed earlier today, a press release put out by the company on Business wire, a brief description of CRA International's business, and three well-written and thoughtful comments from posters on the I-Hub ERHC Energy board, including one prescient post that is now three months old (from Mumfy), calling for Memon's ouster:

Here is the SEC filing today:

New 8-K out, Memon gone, new CEO

Item 1.02 Termination of a Material Definitive Agreement.

On January 20, 2006, by mutual agreement with the board, Ali Memon resigned as director and chief executive officer of ERHC Energy Inc. ("Company"), thereby terminating his employment agreement.

Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

Effective January 20, 2006, by mutual agreement with the board, Ali Memon resigned as director and chief executive officer of the Company to spend more time with his family and to pursue other interests. On January 21, 2006, the board of directors of the Company appointed Walter Brandhuber as a director and chief executive officer of the Company.

Mr. Brandhuber, 51, was a senior consultant at CRA International Limited, in London, from 2003 until his appointment. From 1999 to 2003, he was a managing director and member of the board of Odin Petroleum NV based in London and Amsterdam. He was also on the board of Calverton Limited from 1999 to 2000. Between 1989 and 1998, Mr Brandhuber worked in Union Texas Petroleum, his last
position being vice-president.

There is no arrangement or understanding between Mr. Brandhuber and any other person pursuant to which Mr. Brandhuber was selected as a director. Mr. Brandhuber has no family relationship with any officer or director of the Company. Further, Mr. Brandhuber has not been involved with a related transaction or relationship as defined by Item 404(a) of Regulation S-K between the Company and him. As of the date of the filing of this report, it has not been determined which committee(s), if any, he will serve.

Here is the official ERHC Energy press release from Business Wire announcing the change of leadership:
ERHC Announces Appointment of Mr Walter Brandhuber as President, CEO and Director


January 25, 2006

HOUSTON, Jan 25, 2006 (BUSINESS WIRE) --

On 20th January 2006, by mutual agreement between the board of Directors of ERHC Energy Inc ("ERHC," "the Company") (OTCBB:ERHE) and Mr Ali Memon, Mr Memon resigned as President, CEO and Director of the Company.

On 21st January, 2006 the board of Directors of the Company appointed Mr Walter Brandhuber as President, CEO and Director of the Company.

Mr Brandhuber brings over 23 years of international oil and gas experience. Mr Brandhuber started his oil industry career in 1982 as an acquisition and divestiture executive in Kaiser Francis, a U.S. based oil and gas group. He joined Tenneco Oil in 1984 and worked as international counsel until 1989 when he joined Union Texas Petroleum Inc. At Union Texas, Mr Brandhuber held various key roles in business development and international negotiations. He successfully initiated, led negotiations for, and managed many key projects and alliances in Africa, Europe and Asia. In 1996, he became Vice President and worked in the management team that was responsible for identifying and developing business opportunities in Europe, the Middle East, Africa and the CIS.

Mr Brandhuber left Union Texas in 1998 and from 1999 to 2003 he was Managing Director of Odin Petroleum NV based in London/Amsterdam. From 1999 to 2000, he was also on the board of Calverton International Limited based in Kazakhstan and Brussels. In 2003, Mr Brandhuber joined CRA International, an international consulting firm based in London/Amsterdam and specialising in market entry, oil-and-gas acquisition strategies and business development. Mr Brandhuber was a Senior Consultant with CRA International until his appointment as President, CEO and Director of ERHC.

Mr Brandhuber holds an MBA (Hons) from the University of Notre Dame. He also has a BA (cum laude) from the Loyola University of Chicago and a Doctor of Jurisprudence from the University of Oklahoma. Mr Brandhuber is a member of the Bar Associations in Texas and Oklahoma. He is a former director of the Association of International Petroleum Negotiators. He was an Instructor for Finance at the University of Oklahoma in 1980-81.

Mr Brandhuber is fluent in English and German.

SOURCE: ERHC Energy, Inc.

ERHC Energy, Inc., Houston Jane Barker, 713-626-4700

Here is a blurb from the CRA International Website describing its business:

CRA International UK

CRA Limited provides economic, financial and business consulting services principally to clients located in the UK, continental Europe and the Middle East. The London-based staff focuses on Competition and Litigation Support, Financial Services and business consulting in the Chemicals & Petroleum industries. We work closely with other CRA offices and practices to offer global expertise and services to our clients and to cover a broad range of industries and regions.

In the Competition and Litigation Support area, we provide economic and financial advice to clients in cases before competition authorities throughout the EU and service the increasingly trans-Atlantic market in antitrust and merger economics. In the Financial Services sector, we undertake regulatory economics and strategy assignments for clients including banks, insurers and regulatory agencies and provide finance expertise to clients in a range of sectors. In the Chemicals & Petroleum sector, we combine in-depth industry knowledge with strategic and organisational consulting skills to help oil, gas and chemical companies develop new business strategies, improve performance, identify and execute successful acquisitions and deliver profitable growth.

And here is that prescient post we mentioned earlier:

Posted by: mumfy
In reply to: markgovols who wrote msg# 19321
Date:1/25/2006 4:31:44 PM
Post #of 19368

This may not be a popular post, but I (and others whom I've talked to) are looking forward to the day that Memon is removed from office. He's an incompetant who sits back and expects the market to see all the value in the world, when in fact we are not on anyone's radar screen. All these conspiracy theories about MM manipulation, naked shorting, major shareholders paying off this and that person to keep the price down so they can accumulate are taking attention away from the truth. If the man in charge were doing his JOB, and getting out there on the street to make the major players aware of who we are, what we have, and our potential, then we'd be over $1.00. As it stands, there is no volume and no coverage because nobody (repeat nobody) has a clue about who we are except for our partners. We are not Pioneer or Noble and we can't pretend that we are. Things don't happen for a tiny minnow on their own, you have to make them happen. And Memon has shown this year that he in incapable of doing that.

I sit and wait and hold, but only because I refuse to take a loss on this. But mark my words, if things don't pick up soon, there are those behind the scenes who will remove Memon and get someone in that office who can run a small company like it needs to be run.

One of the I-Hub board's best posters, oilman57, weighed in on the changes with this positive take:

Posted by: oilman57
In reply to: ILUVERHE who wrote msg# 19363
Date:1/25/2006 6:10:25 PM
Post #of 19368
This hiring can be looked at many different ways imo. Some wanted Ali Memon out and have been saying so for months because they didn't feel we had progressed in terms of share price, PSC signings, difficulties with partners, difficulties with Sao Tome, difficulties with promoting the company to the outside world. So those posters are probably ecstatic over the move because they want a change in direction.

Others look at the new CEO's background and feel his background with acquisitions etc might signal we are ripe to be a buyout or buy-in candidate so his background would be beneficial to integrating in with another company or completing the buyout. Or they look at him as being able to better guide through the PSC process going foward.

And others will look at his hiring as a potential negative. Thinking that maybe this whole process is heading toward litigation so he would be the best person to navigate us through potential land mines in the event Sao Tome decides to play hardball or Nigeria decides to cancel the treaty.

My view is, I'm neutral on the whole thing.

And this is another take on the matter from Longtimer, a poster with whom we are not familiar:

Posted by: ERHClongtimer
In reply to: None
Date:1/25/2006 7:44:25 PM
Post #of 19369
Re: Change of CEOs

Perhaps Memon's departure is just a case of passing the baton for the next phase of ERHE's development, and maybe it signifies a shift in the direction that the company is heading.

Memon's Letter to Shareholders was focused on ERHE becoming an E&P company, and Memon's background fit well with the goal of developing an E&P business.

However, reading Brandhuber's biography in today's announcement makes me wonder if the focus has shifted to positioning ERHE as a buyout candidate (likely not in the very near future, but as the value of ERHE's assets are substantiated). In any case, Brandhuber's expertise does seem to strengthen the company's legal footing and resources, something that certainly might not be bad to have at this point in time.

Given the long timeline of the petroleum business, this (an eventual buyout) may be the most expedient path for shareholders to cash in on ERHE's value. I would not be surprised to see communication from Brandhuber about "increasing shareholder value," to this end.

At any rate, it is very encouraging to see ERHE has once again been able to persuade well-heeled expertise to join its ranks. That tells me that we are still on the right track.
- Longtimer