Wednesday, January 18, 2006

Chevron Drills Take A Bite Out Of Prime Block 1

Barry Morgan reports in UpstreamOnline today that Chevron's drill bit sank a mile deep into the waters of the Gulf of Guinea's Joint Development Zone on Jan. 14 for the first time, officially inaugurating what are believed to be perhaps the world's richest oceanic oilfields.

It will be about 60 days, or late March, before drillers will know for sure if they have an elephant field on their hands at Wildcat Obo-1, but judging by their willingness to pay $123 million with ExxonMobil and two smaller players for the chance to find out, it's likely they will.

Morgan also reports on the latest developments in Sao Tome, which has requested a one-week delay in the planned Joint Ministerial Council meeting for the JDZ to discuss Block 4 and other topics among the island's delegation.

The veteran oil industry reporter notes that success in Block 1 will dramatically change the complexion of the strife-torn JDZ in the eyes of the world's investors.

ERHC Energy won operatorships in two blocks immediately east (Block 2) and south (Block 4) of Block 1.

Here is Morgan's story:

First-ever deepwater JDZ probe spudded

By Barry Morgan

All eyes are on the Joint Development Zone (JDZ) managed by Nigeria and the archipelago of Sao Tome and Principe this week as the disputed maritime zone’s first ever deepwater probe was spudded by Chevron.

The US major operates block-1, alongside ExxonMobil as junior partner.

Wildcat Obo-1, located in some 1700 metres and spudded by the Transocean drillship Deepwater Discovery on 14 January, will cost US$60 million and take 60 days to reach total depth.

Production might begin by 2010 if commercial oil is discovered, according to country manager Tim Parsons.

Under a bilateral protocol signed in 2001, revenue from the JDZ will be shared 60:40 in favour of Nigeria. Chevron won the block after bidding in the first JDZ licencing round and the results of this debut well will directly affect confidence in this unproven Gulf of Guinea play.

The Abuja-based Joint Development Authority’s (JDA) Joint Ministerial Council was slated to meet this weekend to fix dates for the ratification of further JDZ awards for blocks two through six allocated after the second licencing round concluded late last year.

However, Sao Tome's Ministry of Natural Resources and National Petroleum Agency has requested the JDA delay by one week, ostensibly to re-examine the controversial operatorship of block-4 by Swiss explorer Addax Petroleum and revisit the impact of ERHC Energy's preferential acreage rights on the islands' revenue expectations.

18 January 2006 17:19 GMT | last updated: 18 January 2006 17:24 GMT

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