Tuesday, February 28, 2006

Blocks 2 And 3 May Be Long Delayed, African Source Says

A source in Africa who is extremely knowledgeable about issues involving ERHC Energy and the Nigeria-Sao Tome Joint Development Zone said today that Blocks 2 and 3 may not see their production Sharing Contracts signed for as much as another two months.

The source wrote to correct a misimpression I left when I suggested based on a misreading of his note that Sinopec may sign a PSC with ERHC and the Nigeria-DRSTP Joint Ministerial Council on March 14, when Block 4 is expected to be signed.

The source, whom I will refer to as "Doc" in the future, wrote:

When you wrote that "Sinopec is indeed likely to become operator of Block 2 with ERHC Energy if a PSC is signed as expected on March 14," that is not exactly what I intended.

The last I heard (this morning) is that any signing on the 14th would be for block 4 alone - or *possibly* 3 and 4 - and also that Dr. Daukoru is bracing himself for some very strong arm-twisting coming from the highest echelons as he visits your nation's capital.

The word is that there is so much money to be made out of Block 2 that the Americans are ready to do *anything* to get a part of the pie, and if possible operatorship.

Frankly, given what I know, I doubt they will succeed in the latter, but the former is possible because they could easily make an offer so large that Conoil or Hercules couldn't refuse.

This would help everyone save face too, but I would be *very* surprised if block 2 PSCs are agreed to within two weeks. Two months is much more likely, although given the JDA record that might be optimistic.

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