Friday, March 31, 2006

Upstream's Morgan Sends Mixed Message Of Opportunities, Lawsuits

In the latest from industry veteran Barry Morgan of UpstreamOnline, the petroleum industry trade paper, it appears that the beneficiaries of much of the largesse from signature bonus fees paid to Sao Tome and Principe will be that country's lawyers.

Not only is Sao Tome once again kvetching about the rights ERHC Energy gained in its Exclusive Economic Zone in Feb. 2002, but the nation's oil agency Website says we have lost our rights to Blocks 5 and 6 by failing to sign Joint Operating Agreements, Production Sharing Contracts and make a timely signature bonus payment for those orphan blocks of the 2004 licensing Round.

Moreover, the country's rumor mill is spreading the news that we are involved in a lawsuit with a South Afrcan firm, Procura, whose interests and claims were purchased and settled by ERHC parent Chrome Energy in 2001 for $500,000.

There's ample good news, too, though, if it turns out that rumors of a big Chevron find in Block 1 of the Nigeria-Sao Tome and Principe Joint Development Zone is accurate. Those rumors have gained wide currency over the past two weeks and began with a tip offered here in ERHC On The Move on Feb. 14. They have since moved to the Wall Street Journal, Forbes and other major publications.

As far as share price, however, it will take some effort to clear up the facts and distinguish the truth from the falsehoods in the Sao Tome rumors, and it remains to be seen whether investors have not already fully discounted the Chevron find.

ERHC Energy shares (OTC BB symbol: ERHE) closed Thursday at $0.84, where it traded only once.

The price weas $0.83 x $0.84 at the 4pm ET close, and closing volume was 1,998,100 shares. The low of the day was $0.82, and it appeared that ERHC might at least test that level at the opening today.

Here is the Upstream article:

Hopes grow for big catch in Sao Tome

By Upstream staff

Hopes for an oil bonanza are building in the Gulf of Guinea Joint Development Zone (JDZ) managed by Nigeria and Sao Tome&Principe as indications strengthen that Chevron has made a significant discovery in Block 1.

The find comes just after blocks 2, 3 and 4 have been signed up by respective operators Sinopec, Anadarko and Addax Petroleum, which will net the two countries more than $200 million in signature bonuses, payable within a month and split between Abuja and Sao Tome on a 60:40 basis.

Drilling on blocks 2,3 and 4 could get under way later this year.

Chevron and partners ExxonMobil and a tie-up between Dangote, Energy Equity Resources and Afren, agreed a bonus of $123 million in 2003 for Block 1, and the operator aims to post positive results for debut wildcat Obo-1, which was completed this month.

The partners have remained tight-lipped on the details, but multiple sources have suggested the so-called Hercules structure could contain more than 1 billion barrels of oil and at least 1 trillion cubic feet of gas.

A Deutsche Bank report released this week is already touting a $3.2 billion development for Obo, with a 2013 start-up.

Analyst Wood Mackenzie suggested test results may be delayed by ongoing efforts by Chevron to enter Nigerian independent Conoil's neighbouring deep-water Block OPL-257, but the parties have declined to comment.

Among those set to benefit from the Block 1 find are partners Addax and Houston-based ERHC Energy, which together hold stakes in blocks 2 and 3 and operate Block 4.

However, Sao Tome's National Petroleum Agency posted a statement this week indicating that ERHC has lost its preferential and bidding rights to the remaining second-round blocks 5 and 6 after failing to comply with the JDZ Joint Ministerial Council's demands for signing effective joint operating agreements.

Despite intense negotiations by suitors to finalise a production sharing contract for at least one of these blocks, it is understood that the Joint Development Authority (JDA) may consider offering them in a third round, possibly later this year.

Completion of the latest JDA round paves the way for Sao Tome to belatedly start licensing acreage in its own Exclusive Economic Zone (EEZ).

However, discord is again brewing over conflicting claims to preferential rights to EEZ acreage, with ERHC claiming access to two blocks of its choice, and AIM-listed Equator Exploration insisting on similar privileges.

The Sao Tome National Petroleum Agency recently declared on its website that Equator has "acquired two blocks from Petroleum Geo-Services under the option agreement (dating back to) February 2001".

However, ERHC contests the legal basis of this assertion.

Equator also holds a junior equity stake in Sinopec-operated JDZ Block 2.

However, this, along with its EEZ claim, is subject to alternative claims by former ERHC partner Procura Financial.

Upstream understands that lawsuits related to the various claims are being prepared in a move that could further delay exploration and production in both Block 2 and Sao Tome's EEZ.

30 March 2006 23:01 GMT | last updated: 30 March 2006 23:01 GMT

ERHC Energy Reorganizes Board, Audit Committee

In an unexpected press release late Thursday, ERHC Energy announced it had changed the makeup of its Board of Directors by adding two new faces and reorganizing its Audit Committee to give outside directors the reins as recommended by the Securities Exchange Commission.

In another move, the board sent Chief Fonancial Officer Ike Okphala, a longtime ERHC employee, to Nigeria to head its "imminent" operations there, the company said. The CFO post was abolished, and replaced with a Vice President (Finance) position to be filled by Franklin Ihekwoaba, a former Priceaterhousecoopers and Primerica executive and a U.S. citizen.

Clement Nwizubo, a New York CPA, is the other new director and new Audit Committee chairman. CEO Walter Brandhuber and longtime ERHC employee Nicolae Luca were replaced on the Audit Committee by independent directors Howard Jeter, former U.S. Ambassador to Nigeria, Andrew Uzoigwe and Nwizubo.

The changes seem to be aimed at making ERHC Energy a more conventional and accountable company within the new regulatory schema of the SEC.

Here is the release:

ERHC Announces Appointment of New Directors and Reconstitution of Audit Committee
Thursday March 30, 5:55 pm ET

HOUSTON--(BUSINESS WIRE)--March 30, 2006--On 25th March 2006, the board of Directors of ERHC Energy Inc. ("ERHC," "the Company") (OTCBB:ERHE - News) took the following actions:

The number of members on the board of directors was increased from five to seven. Two new directors, Clement Nwizubo, CPA and Franklin Ihekwoaba, CPA were appointed to fill the vacancies resulting from the increase. Mr. Nwizubo shall serve as a non-executive director while Mr. Ihekwoaba shall be an executive director.

The audit committee of the Company, made up of Walter Brandhuber and Nicolae Luca, both not being independent directors within the meaning of the regulations, was dissolved and a new audit committee constituted. The new audit committee is made up of the Howard Jeter, Andrew Uzoigwe and Clement Nwizubo. Mr. Nwizubo, being a person qualified to be audit committee chairman and financial expert was appointed the chairman and financial expert of audit committee.

A new executive position of "Vice President (Finance)" was created in the Company's executive structure to subsume and replace the current position and title of "Chief Financial Officer." The holder of the new position of Vice President (Finance) shall be the chief financial and principal accounting officer as well as treasurer of the Company. The holder of the new position shall be a member of the board.

Mr. Ike Okpala, the holder of the defunct position and title of "Chief Financial Officer" resigned from the position immediately before its vacation by the board and was re-assigned to the Company's imminent operations in the Nigeria - Sao Tome & Principe Joint Development Zone ("JDZ"). Mr. Franklin Ihekwoaba was appointed the Vice President (Finance) of the Company, in which capacity he becomes the chief financial and principal accounting officer as well as the treasurer of the Company.

Mr. Nwizubo, 54, is currently President of Clement E. Nwizubo, CPA, PC, a New-York based firm which he founded in 1987. From 1985 to 1987, Mr. Nwizubo was the Manager of Financial, Accounting and SEC Reporting at Primerica Corporation. From 1983 to 1985, he was the Audit Manager of Watson Rice and Company. Between 1980 and 1983 he worked as a senior accountant with Stewart Benjamin and Brown. Mr. Nwizubo is a Certified Public Accountant. He took a BS in Accounting and Business Administration in 1977 from Oneonta State College, NY and an MBA in 1980 from Fordham University. Mr. Nwizubo is a US citizen.

Mr. Franklin Ihekwoaba, 42, worked as a Group Head, Strategy, Finance and Risk Management in Oando Plc, Lagos, from December 2004 to December 2005. Prior to that, he had worked with PricewaterhouseCoopers Limited in Nigeria from October 2001 to October 2004. From 1998 to 2001, Mr. Ihekwoaba worked with PricewaterhouseCoopers LLP in Arlington, VA as a senior consultant. He was a consultant to the Congressional Black Caucus Foundation, Washington DC, during 1998. From 1994 to 1998, he had served as Interim Director, Finance and Accounting, of Blackhawk, Suitland, MD. He was a financial consultant at Howard Hughes Medical Institute, Chevy Chase, MD, from August 1997 to August 1998. From 1992 to 1997, he was an accountant with the Montgomery County Housing Opportunities Commission, Kensington, MD. From 1989 to 1992, he was accounting manager at the St John's Child Development Center, Washington DC. From 1988 to 1989, he was a property accountant at ADM Property Management and Development, Washington DC. Mr. Ihekwoaba has a B.S. Accounting and Finance from the University of Minnesota, which he took in 1987. In 1992, he took an MBA in Financial Management and, in 1993, an MBA in Computer Information Systems from Southeastern University. He has attended financial analysis courses at the Harvard Business School. Mr. Ihekwoaba is a US citizen.

Thursday, March 30, 2006

Platts: Sao Tome Says Chevron May P.R. Find "Today Or tomorrow" _ But They're Wrong

Although the company has repeatedly said that it won't issue a press release on whatever it has found beneath the deep blue waters of the Gulf until it has completed an evaluation of the results in April, Platts' Jacinta Moran said Tuesday that Sao Tome officials have told her a press release could come as early as "today or tomorrow."

But beyond that miscalculation, the problem for investors is this: If the find is a billion barrels, ERHC Energy investors have known about it since we first broke the story of "big oil" back in early February. The 34 market makers who trade our stock also know. So do the millions of people who have read articles by Norval Scott in the Dow Jones premium wire, David Ivanovich of the Houston Post, and Ken Silverstein of the Los Angeles Times.

Throw in articles in Forbes, The New Yorker, the great book by Joel C. Rosenberg called The Christmas Strike, and what you have is not a marketplace that is ignorant of ERHC Energy but one that is wary of it, perhaps too much so.

And you always have to wonder if talking to Sao Tome leaders isn't like talking to the Joint Development Authority - they're wrong every time but once. They were also wrong about "today or tomorrow," as tomorrow was yesterday, March 29.

Here's the Platt's article, courtesy of Mark St. Amour and two days late:


builds on Chevron well in Sao Tome-Nigeria JDZ

Paris - The government of Sao Tome and Principe March 27 said partners operating Block 1 in the Joint Development Zone, who may have struck a substantial find, would present a report on the results of early drilling before the end of this week.

"We are still waiting on the announcement of Chevron. We have been hearing rumors, but we are still waiting on the official announcement, which could be today or tomorrow," Sao Tome National Petroleum Agency Executive Director Luis Prazeras said
in a telephone interview.

Strong indications have emerged in recent weeks that Chevron has encountered a substantial oil-bearing structure in the exploration well Obo-1 in Block 1, which also may straddle ERHC Energy's Block 2 in the JDZ.

Operator Chevron and partners ExxonMobil, Dangote-EER and Afren started drilling the
60-day well in mid-January. The block will test the potential of Nigeria and Sao Tome's shared offshore region and has generated considerable interest from global upstream players.

Chevron has a 51% stake in Block 1, ExxonMobil 40% and Nigerian Dangote-EER/Afren 9%. The consortium won exploration rights to the block with a $123 million bid in an October 2003 tender.

The potential discovery of offshore oil reserves has generated expectations among the impoverished citizens, but Sao Tome President Fradique de Menezes repeatedly has said his government plans to use the new oil revenues to tackle poor health and education.

World Bank and International Monetary Fund officials have held talks with de Menezes to discuss ways to regulate the spending of oil revenues.

"Of course, this will have a big impact on the country. Sao Tome is a small and poor country and we want to do what is proper for the country," Prazeras said.

-Jacinta Moran

Wednesday, March 29, 2006

And Now, For A Slight Change Of Pace

There's apparently a reborn Neal Cassady (from Jack Kerouac's "On The Road) hard at work on the Investor's Hub board named badog and he is one hell of a writer.

As the price of ERHC Energy slipped today and investor tempers frayed, badog's incredibly funny post livened things up.

Here it, slightly edited for bad spelling:

We just went down. We always go down. This is just so unfair. My broker says don't worry this is just profit taking. I didn't take any profits. Did you take profits? I never get profits. All I ever get is screwed. What a bunch of crap! This stock sucks! Analysts now say it's a dog. Brokerage house made reference to "this puppy". Oh great I own another dog! Dogs suck! My wife had a dog. He hated me . We had to take him to a vet to have him put out of his suffering. The vet offered my wife a 2-for-1 deal on me and the dog. What was that all about? Damn dog died of natural causes by the time I talked my wife out of it. I hate dogs. Vets suck! My broker says don't worry this stock is not a dog. Just shorts and MM's screwing with the stock. This stock is a leader he says. Nothing can go wrong. It's smooth sailing from here. Oh man - isn't that what they said about the Titanic? Oh my God I'm on a fricken dogship to hell! My broker says don't worry short squeeze coming. Too many shorts. Oh man why does there have to be so many shorts? Why do they all have to be so mean? Why do they always drive my stocks down? What did I ever do to them? My broker says they will get theirs. They got theirs all right, and mine too. They always get my money. Short squeeze coming! What a bunch of crap! The only shorts squeeze I ever get is when my wife makes me wear those darn bikkini briefs. Bikini briefs suck. I hate shorts! I bet my wife is a short. I think my wife shorts this stock everyday just so she can whoop my ass when I get home! And who are these MM people screwing with my stock? Who do these people think they are? What are they? Has anyone ever seen them? What does M&M stand for? I close my eyes at night and all I can see are these these people dressed in colorful candy-coated outfits chuckling while they are screwing with my money and my mind. I hate M&Ms. Melts in your mouth not in your hand! What kind of scam was that? MM's, shorts, my broker and this stock suck. I'm $12 dollars from a margin call and Monday is coming. Margin sucks. Why did I ever buy on margin anyways? Margin - what a scam! Where are we going from here? I'll tell you where we are going. Straight down! My stocks always go down.

I hate investing! Investing sucks! Why does this always happen to me? Oh this is just great! They just posted interest in my margin account and triggered a margin call. Margin interest - what is that all about? I don't remember my broker mentioning margin interest. Margin interest? Oh that is so unfair! "Buy more ERHE" my broker said. "I ain't got no money" I told him. He said what about margin? I said "I hear its risky." "Only for losers" he told me, "not for astute positive thinkers like yourself. Remember" he says "I'm your friend I only have your best interests at heart. If you do well I do well. Easy money he says." I ask "shouldn't I diversify?" He says he'll let me in on a little secret." Top analyst is about to initiate coverage on ERHE with a strong buy. After that nothing but splits coming." Oh wasn't that just a peachy keen tip now. Analyst upgrades ERHE and it drops another $.20 a share. Analyst upgrades ERHE and downgrades my financial condition to life support with one swoop! Analysts suck! Well I tracked my broker down by phone yesterday. He's down in the Caribbean. I guess he's down there with my easy money looking out for my best interests. Full service brokers what are they all about? Weren't there enough used car lots to go around? My broker sucks! He costs me money twice, once when he gives me advice and once when I take it. Oh yeah. I almost forgot he is my friend. I asked him once "If you are my friend why don't you give me some free advice?". So he did! He told me to marry the woman who is now my wife. What a #######! I hate my broker! Margin interest, analysts, ERHE, free money and my broker suck! Well my broker says I'm overeacting "Splits are coming!" Splits - what a scam! "Here I'll take your 10 and give you two fives. Keep the change!" What the #### is that all about? This is going to make me rich? No matter! ERHE will never split as long as I own it. My stocks never split. Splits coming? What a bunch of crap! I have news for my broker. The splits are here. ERHE and my broker have split the value of my account in half and my wife is going to split my lip when she gets wind of this margin call. I hate splits! Splits suck! Well I have three days to cover my margin call. I hope my stocks go up tommorow. Oh they won't go up. My stocks never go up. That is not until the day after I sell them. I wish I had cash. I never have cash. Why did I put all my cash into my Y2K generator business? Y2K - what a scam that was! Y2k, margin calls, my broker, ERHE and my life suck! Why does this always happen to me?


Badog, sell your stock and buy a literary agent.

Lots Of Readers


Total 141,044
Average Per Day 1,559
Average Visit Length 2:13
Last Hour 72
Today 1,875
This Week 10,916


Total 197,673
Average Per Day 2,099
Average Per Visit 1.3
Last Hour 94
Today 2,468
This Week 14,690

On Another Front

So far, ERHC On The Move has not selected a Managing Editor. We thank all of you who have posted resumes and requests for information.

ERHC Energy Spills $0.04 After Report Says Block 1 Find Is Not Substantial

After one report this morning knocked down claims that the ChevronTexaco find in Block 1 was not nearly as large as rumored, ERHC Energy fell $0.04 to $0.845 and investors faced the prospect of a lengthy wait for different news.

Whether the lure of the big find has already been completely discounted or the trouble in Nigeria over the escape and recapture of Liberian warlord Charles Taylor depressed the price, the gains of recent days seeped out of the stock, which fell as low as $0.84 before stabilizing. The high of the day was $0.89. We "panicked and sold" at a small profit and now plan to get in several cents cheaper.

Here is the report from Upstream:

Afren quashes Obo rumours

By Upstream staff

London-listed explorer Afren has poured cold water on media speculation that the Obo-1 well, in Chevron-operated Block 1 in the Nigeria Sao Tome & Principe Joint Development Zone, could hold up to 1 billion barrels of oil and gas.

Afren said the well is still being evaluated, adding the results "will not be known until the operator has completed its evaluation and authorised the release of further information".

Newspaper reports published in Africa and the US yesterday said drilling results indicated that Obo-1 held up to 1 billion barrels. The reports cited an unnamed source.

Chevron operates Obo with a 51% stake. Its partners are ExxonMobil (40%) and Nigeria's Dangote Energy Equity Resources (9%). Afren has a 49% holding in Dangote Energy through its wholly owned subsidiary Energy Equity Resources.

At 11:55am ET, the price was $0.84 x $0.845 on 1,547,953 shares of volume.

CNN broadcast live a discussion between President George W. Bush and Nigerian President Olusegun Obasanjo that briefly veered into security issues concerning the Gulf Of Guinea, but there was no happy announcement of a major find.

According to many news reporrts, the meeting was almost cancelled after Taylor escaped from his villa in Nigeria, prompting a concerned call from Secretary of State Condoleeza Rice, but was put back on the agenda when he was captured at the border and flown to Monrovia to stand trial for war crimes.

All of this took place under the shadow of the moon as much of Afrca observed a total eclipse of the sun.

Tuesday, March 28, 2006

Deutsche Bank Report Says ERHC May Benefit From Block 1 Find

In a report whose wider circulation is sparking a modest rally during today's sharp decline in the share price of ERHC Energy (OTC BB symbol: ERHE), Deutsche Bank analysts said yesterday that ERHC, Anadarko and other companies in surrounding blocks may benefit from the rumored discovery of a billion-barrel oil reservoir by Chevron in Block 1 of the Nigeria-Sao Tome and Principe Joint Development Zone.

The report comes as well-known energy consultants Wood Mackenzie confirms to Deutsche Bank the size of the find at Chevron's Obo-1 well in prospect A-1, which is close to the midline between ERHC/Sinopec's Block 2 and is believed to overlap it.

Here is the Deutche Bank report:

27 March 2006

Sao Tome Deepwater
Obo-1 - Worth the wait

Paul Sankey
Research Analyst
(+1) 212 250-6137

Ryan Todd
Research Associate
(+1) 212 250-8529

A long delay - but worth the wait

After two years of wrangling over concession terms and the withdrawals of Devon, Noble Energy and Pioneer from block participation, the first well has been drilled in the Nigeria Sao Tome JDZ. While Chevron and ExxonMobil remain silent, news reports and Wood Mackenzie confirm a discovery, with initial estimates similar to Nigeria's Akpo containing 1 billion barrels of oil and condensate and 1 tcf gas reserves.

Expanding the deepwater play

Potential farm in negotiations in the neighboring Block OPL 257 may be keeping ExxonMobil and Chevron silent, but Obo-1 appears to be a success, with preliminary reserve estimates near 1 billion barrels. This is the first well drilled in the Nigeria Sao Tome JDZ and the furthest offshore, extending the deepwater Gulf of Guinea play and possibly opening the door for future success at Blocks 2, 3 and 4, which should spud wells by 2007.

Month of good news

The news comes in a positive month for ExxonMobil’s upstream. The company came to terms with Pertamina after years of delay for the development of Cepu in Indonesia, and today announced that final terms were reached with Abu Dhabi National Oil Company for the expansion of the massive Upper Zakum field. Each of these projects was absent from this month’s analyst presentation and should contribute to the projected medium and long term volumes growth.

It’s good to be small

Based on a development the size of Nigeria’s Akpo to the north of Obo-1, the present value of the development is $3.2 billion when discounted at 8% and $2.2 billion when discounted at 10%, based on a 2013 start up. While the discovery is good news for Chevron and ExxonMobil, smaller players such as Afren on Block 1 and participants on nearby blocks such as Anadarko, ERHC Energy Inc, and Centurion Energy may benefit significantly from future success. Risks include poor results in future appraisal wells, dry holes in nearby blocks, and the ever-present geopolitical risk associated with both Sao Tome and Principe and Nigeria.

First well in Nigeria Sao Tome JDZ potentially 1 billion barrels

While as yet unconfirmed by the companies, new reports confirm positive results from the drilling of Obo-1, the first well drilled in the newly opened Nigeria Sao Tome and Principe Joint Development Zone. Initial estimates put reserves at nearly 1 billion barrels of oil, with Wood Mackenzie comparing the resource to that of Akpo, located in the block just to the north of Obo-1. Akpo has estimated reserves of nearly 1 billion barrels of oil and condensate and 1 tcf of gas. Obo-1 is located on Block 1, operated by Chevron (51% interest), with partners ExxonMobil (40%) and Dangote Energy Equity Resources (9%, with Afren Plc owning 49% of Dangote).

Wood Mackenzie reports that the companies’ delay in reporting the well results may be due to ongoing farm-in negotiations at the neighboring block OPL 257. The blocks were originally awarded in early 2004, but have since been plagued by delays over contract terms and struggles with the Nigerian government over lease holdings by inexperienced Nigerian companies. Resulting disputes and delays prompted the withdrawal by US companies Devon, Noble Energy and Pioneer from their respective blocks.

Initial estimates of the resource size are comparable to the Akpo development in the block just north of Obo-1, with an estimated 1 billion barrels of oil and condensate and 1 tcf of gas. A resource of this size with an estimated start-up of 2013 and long term oil price of $40/bbl results in a valuation of $3.2 billion when discounted at 8%, or $2.2 billion when discounted at 10%. The discovery is a significant find for Chevron and ExxonMobil, but especially dramatic for minority players Dangote Energy Equity Resources and Afren (Afren owns 49% of Dangote).

As the first well drilled in the Nigeria Sao Tome JDZ blocks south of the existing Nigerian offshore blocks, the success is important. Success continues to expand in the prolific West Africa basins and extends the deepwater Nigerian play, which is an increasingly important part of the majors’ portfolios. A significant commercial find bodes well for future drilling on Block 1, as well as for Blocks 2, 3 and 4, which should spud wells by 2007. Participation in these blocks is dominated by smaller players, with names to watch including Anadarko, Addax (Swiss), Centurion Energy and ERHC Energy Inc., which has a solid stake in Blocks 2, 3, and 4.


1/Chevron, ExxonMobil, Dangote Energy Equity Resources, Afren
2/Sinopec, Addax/ERHC, ONGC, Equator, Foby Engineering, Momo Oil & Gas
3/Anadarko, Addax/ERHC, DNO-EER, Equinox, Ophir, Broadlink
4/Addax/ERHC, Conoil, Overt Energy, Godsonic, Centurion Energy, Hercules Energy

Sinopec (SNP) May Be Biggest Beneficiary Of Block 1 Find, But It's A Big Loser Today

The billion-barrel oil discovery in Block 1 may benefit China's Sinopec more than its discoverers if a substantial part of the reservoir lies beneath Block 2 and Sinopec doesn't have to drill a well to start earning royalties from it.

While ERHC Energy also stands to gain, as does Addax Patroleum, it is the Asian oil giant - the second-largest (after CNOOC) in China and the sixth-largest in the world - that will reap untold millions if as much of the Block 1 oil is under Block 2 as rumored.

In early trading today, investors were exiting ERHE, bringing the ashare price down $0.059 by 10:20am ET on volume of 1,216,000 shares.

So far, no one has suggested the rumors are untrue, and the contrary may be the case: they may be sitting on more oil than rumored.

Much of that conundrum will be sorted out today when executives of ChevronTexaco and ExxonMobil meet today to plan strategies for announcing the find and exploiting its substantial dimensions.

Meanwhile, Sinopec has been hit by poor first-quarter earnings reports, and slipped more than $1 yesterday to close after hours at $60.39. By 10:22am ET this morning, Sinopec's ADRs were trading $2.43 lower at $57.74, down 4 percent, on the news that China intends to stamp a windfall profits tax on oil that company officials said will "certainly cut into our profits." Unlike in a democracy, no action by an elected and representative legislative body is required to impose such a tax - one peril of working with Communists.

The stock has not yet discounted the likelihood of participation in the Block 1 find, however, while an Afren map (see Slide 17) in a recent financial presentation shows it is likely to do so.

If, as expected, traders buy on the bad news, they may find themselves in line to reap on the good.

Disclosure: ERHC On The Move has 380 shares of Sinopec for just such an eventuality. We also have 17,500 shares of ERHC Energy purchased between $0.865 and $0.885.

Monday, March 27, 2006

Chevron Speaks At Last, But Like The Sphinx, Says Little

Finally, Chevron the Sphinx has spoken, and the news is good but the information only tantalizing. A company official says Chevron has completed testing a well in Block 1 - apparently just 15 miles from ERHC/Sinopec's Block 2 of the Nigeria-Sao Tome and Principe Joint Development Zone - but would provide no specifics.

The few-and-far-betweeen words were nonetheless welcome, even if they could not be directly quoted by CBS MarketWatch, which dragged them out of the multinational giant.

MarketWatch did convince a "senior equity analyst" at one brokerage to go out on a limb and characterize the "billion barrels" that The Business last week said was found.

"That's a significant find," she boldly said.

Here is the received wisdom of the ages, and another reiteration of the article in The Business on Friday:

Chevron testing promising Africa well

By Jasmina Kelemen, MarketWatch
Last Update: 6:59 PM ET Mar 27, 2006

HOUSTON (MarketWatch), 6:40pm, 03/27/2006 -- Chevron Corp. said Monday it has completed its first exploration well off Western Africa's coast in a discovery that's reported to have as much as 1 billion barrels worth of oil and gas.

A Chevron (CVX) official said the company is evaluating the results of the drilling, completed on March 15. The official declined to give specifics about the well, other than to say it's in waters of Sao Tome and Principe, a tiny archipelago nation near the equator in the Gulf of Guinea.

But initial geological studies of the well suggest there are around 1 billion barrels of recoverable reserves, according to a weekend report in The Business, a British newspaper, citing unnamed sources.

If the billion barrel mark holds true, it would put the discovery on par with the entire holdings of some large exploration and production companies, said Aliza Fan, senior equity analyst at John S. Herold.

"That's a significant size," Fan said.

Even if the well found a thick column of oil, discoveries typically require several more wells to delineate the size of the field and its commercial potential.

For Chevron, a major discovery would come at a time when the San Ramon, Calif.-based company is struggling to expand its reserves. Its oil and gas holdings stood at 9 billion barrels of oil equivalent at the end of 2005.

Chevron acquired rights to explore the island nation's waters in October 2004 and began drilling Obo-1, the location of the well, last January.

It now has a 51% stake in the site, with Exxon Mobil (XOM), holding 40% and the rest owned by Dangote Energy Equity Resources, a jointly owned Nigerian-British driller.

On Wall Street, Chevron shares were among the Amex Oil Index's ($XOI) top advancers on Monday, rising 1.1% to $58.21. Exxon (XOM) added 0.2% to $61.29.

A former Portuguese colony, Sao Tome and Principe is eyeing its territorial waters in the oil-rich Gulf of Guinea as a way to transform its agrarian economy. It sold its first production licenses in 2004.

Ronald Gold, vice president of Petroleum Industry Research Foundation, said that while the Obo-1 discovery appears to be significant, it doesn't represent a big impact in market terms.

"When Prudhoe Bay was found [in Alaska], it was announced at 8 billion ... so 1 billion barrels is very nice but it's not going to change the world oil supply," said Gold.

The JDZ Block-1 is located approximately 190 miles north of the city of Sao Tome and approximately 125 miles from the city of Port Harcourt in Nigeria.

Jasmina Kelemen is a MarketWatch reporter based in Houston.

It's also been a good day for ERHC On The Move statistics. This site draws more visitors whenever folks consider making an investment in ERHC. Once again, our placement as the second result in Google for "erhc" is reaping readers:

VISITS (at 11:11pm ET)

Total 137,167
Average Per Day 1,450
Average Visit Length 2:07
Last Hour 66
Today 2,284
This Week 10,150


Total 192,497
Average Per Day 1,933
Average Per Visit 1.3
Last Hour 98
Today 3,255
This Week 13,531

Tillerson: Exxon Eyes West Africa Mother Lode; Dow Jones Concurs

An article in Forbes has described the rumored find in Block 1 of the Nigeria-Sao Tome and Principe Joint Development Zone as West African "mother lode," and the word may have come from CEO Rex Tillerson during an interview with the magazine, which attributed the information to the Agence France-Presse rewrite of a story in The Business that has been widely rewritten.

Company news about a deal with Abu Dhabi (no complaint about terrorists now?) precedes the generous mention.

Here is the Forbes article:

Faces In The News
Tillerson's Exxon Eyes Mother Lode In Africa
Greg Levine, 03.27.06, 10:47 AM ET

New York - Today, Rex W. Tillerson is the candyman. He's the chief executive of Exxon Mobil (nyse: XOM - news - people ), the gigantic integrated petroleum company--which had tantalizing news to report.

On Monday, Tillerson's colossus announced it struck a deal with the Abu Dhabi National Oil Co. (ADNOC) and that emirate's Supreme Petroleum Council (SPC) to buy a 28% stake in the Upper Zakum oil field. The presumably rich field is off the coast of U.S. ally United Arab Emirates.

ADNOC will retain a 60% interest in the field and Japan Oil Development will continue to hold the 12% balance.

Tillerson's firm said the U.S.-, UAE- and Japan-based companies will act via their joint operating company, Zakum Development, to up production by some 50%. The target is 750,000 barrels of oil per day. Exxon will support drilling operations, create a technology hub in Abu Dhabi and furnish personnel training. Dollar amounts were not disclosed.

And the Texas tea keeps flowin': Over the weekend, Tillerson's colossus and rival U.S. oil major Chevron (nyse: CVX - news - people ) may have struck a mother lode off the West African island state of Sao Tome and Principe.

According to the AFX newswire, preliminary drilling results indicate the offshore Obo-1 well may contain more than a billion barrels worth of oil and natural gas. Led by Chairman and CEO David O'Reilly, Chevron is the lead operator of the field with its 51% stake, while Exxon holds 40%. The balance is owned by Nigeria's Dangote Energy Equity Resources and Afren.

Tillerson's and O'Reilly's firms are slated to sit down on Tuesday to plot their course.

President George W. Bush recently said America has an oil monkey on its collective back. Monday's news makes it look like the U.S. can satisfy that petroleum jones for a while longer.

Dow Jones also released a story - like all the others based on The Business article, at the end of the trading day via its China wire:

DJ UK PRESS: Chevron, Exxon Eye Big African Oil Discovery

Monday, March 27, 2006
Dow Jones Chinese Financial Wire
Copyright (c) 2006, Dow Jones & Company, Inc.

LONDON (Dow Jones)--U.S.-based Chevron (CVX) and Exxon Mobil (XOM) have
made an African oil discovery that could hold more than a billion
barrels worth of oil and gas, the Business newspaper reports.

The find promises to be one of the largest this year off the shore of
the West African State of Sao Tome and Principe.

The Business quotes a source who has seen the drilling results completed
on March 15. 'It is an encouraging result. Everyone is pleased,' the
newspaper reports.

The source added that Chevron and Exxon will meet Tuesday to plan their
next moves.

Chevron and Exxon weren't immediately available for comment.

Newspaper Web site:

-London Bureau, Dow Jones Newswires; +44 (0)20 7842 9320

Disclosure: ERHC On The Move holds 300 shares of ExxonMobil and 300 shares of Chevron/Texaco, as well as 500 shares of Sinopec, which is in the adjoining block. In addition, a family trusts owns Chevron. I do not currently own ERHC Energy shares.

Will Today Be The Day? Long Wait For $1 Could End Soon; ERHE Hits $0.97, A Five-Year High

The price of ERHC Energy shares jumped $0.08 shortly at the opening bell today, and it looks very possible that after years of struggle, the share price may top $1 today. Unfortunately, we are out of the stock - and wish we were not.

Update, 10:53am ET, 3/27/06: ERHE has fallen back to $0.92 x $0.926 on 2,589,409 shares of volume.

The action came as Chevron apparently prepares to announce a major oil find that has been rumored in newspapers and message boards across the globe over the weekend.

Here are two videos, from Forbes and, mentioning the find; the Forbes one is better:

At 9:51am ET, ERHE stood up $0.08 at $0.97 - a record high for the past five years, on volume of 1,698,820 - slightly loweer than would be expected for a jump of this magnuituide, suggesting that there is still hesitation in the markeptplace.

Part of the problem is that ERHC Energy is not the one discovering the oil. ChevronTexaco's Obo-1 test well in Block 1 of the Nigeria-Sao Tome and Principe Joint Development Zone is widely rumored to have a trike of 1 billion barrels, but there has as yet been little mention of the find straddling Block 2, where ERHC is in an operating consortium with Sinopec. And many mentions of Sinopec in Block 2 include no mention of ERHC.

Sinopec shares were falling sharply today, while Chevron was barely able to stay even and ExxonMobil, its partner in the Block 1 consortium, was also down.

Disclosure: ERHC On The Move has substantial investmentsd in Chevron, Exxon and Sinopec.

Sao Tome Election Results Unaccountably Delayed

A top-ranking election official "unaccountably" failed to appear this morning to announce partial results for the Sao Tome and Principe parliamentary elections that occurred over the weekend.

The official's failure to launch came as a fax of uncertain origins said the centrist party of President Fradique de Menezes was confortably ahead of the left-wing MLSTP in a substantial number of seats.

Sao Tome has gone through enormous changes in its political mood over the past six months as the nation went from opposing most of the lucrative awards in the Nigeria-Sao Tome and Principe Joint Development Zone to celebrating the arrival of tens of millions of dollars in signature bonus fees paid for oil blocks by comapnies seeking a role there.

The money is based on a 40:60 split of such fees with Nigeria.

Here's one report from Dow Jones on the delay of results, followed by another from Lusa:

DJN: DJ Sao Tome Election Results Delayed For A Week By Boycotts
(Dow Jones 03/27 07:37:16)

SAO TOME, Sao Tome and Principe (AP)--Demonstrators protesting poor services
in Sao Tome and Principe kept thousands from voting in Sao Tome's weekend
presidential elections, officials said Monday.

The National Electoral Commission said polling in the affected districts,
where some 10,000 of Sao Tome's almost 70,000 voters were registered, would
be held April 2, a week after the rest of the nation voted. Results were to
be delayed until after the April 2 balloting.

The demonstrators protesting poor public sanitation, health care, roads and
unreliable or absent energy supplies erected barricades around polling
stations Sunday. Police didn't attempt to remove the barricades.

Sao Tome is hoping to reap benefits from the discovery of oil in its
territorial waters, but political instability has brought four governments
in the past five years and slowed plans to generate economic growth.

Sao Tome has a population of about 140,000 and is one of the world's poorest
countries, according to the U.N.

(END) Dow Jones Newswires

And here's the Lusa story:

STP News: Political tension rises after election boycotts and delayed results

Sao Tome, March 27 (Lusa) - Political uncertainty mounted in Sao Tome and Principe Monday, following legislative elections that were marred by boycotts and an unexpected delay in the announcement of official partial results from Sunday's vote.

The head of the National Electoral Commission (CEN), José Carlos Barreiros, failed to appear, without explanation, at a morning news conference called to release partial tallies from the vote.

He was not immediately reachable for comment and was reportedly absent from the CEN's headquarters.

Barreiros called the Monday morning news conference to announce partial results late Sunday night, after saying the vote would be repeated next Sunday in 13 precincts where the election had been boycotted over local issues.

The CEN had originally set the release of partial electoral results for Sunday night.

The boycotts, apparently organized to protest the lack of roads, potable water and electricity, affected 13 precincts with about 10% of the islands' nearly 80,000-strong electorate, according to the CEN.

Adding to the uncertainty, visiting foreign journalists received a fax purportedly sent from the Attorney General's office Monday that showed opposition supporters of President Fradique de Menezes comfortably ahead of the governing MLSTP party with about half of the ballots counted.

According to the fax, whose authenticity could not be immediately confirmed, the Menezes-allied MDFM-PCD coalition had taken about 36% of the vote to nearly 29% for the MLSTP and better than 22% for the ADI party, a force linked to former President Miguel Trovoada.

The electoral boycotts Sunday, some involving the blockading of roads and the burning of tires, proceeded throughout election day despite an appeal from the president for voters to express their concerns in a "calm and civilized" way through the ballot box.

Menezes' chief political rival, the leader of the ruling MLSTP party, Guilherme Posser da Costa, convened what he called an "urgent" news conference Sunday to denounce the boycotts as a "sign of panic" from unnamed "adversaries" of his party.

Several of the boycotts, Posser da Costa charged, had affected traditional MLSTP strongholds.

The impoverished Gulf of Guinea islands, which await the beginning of a long-promised "Oil Era" from offshore exploration, has lived through a series of revolving-door governments since Menezes was elected as president in 2001.

Sao Tome and Principe's semi-presidential system of power- sharing has left decision-making structures gridlocked between the president and governments lead by the MLSTP, the largest party in the 55-seat parliament.

Presidential elections, which likely will see Posser da Costa challenge a second term bid by Menezes, are expected later this year.


Nigerian Militants Free Last Three Hostages

Good news comes this morning from Nigeria's southern, oil-rich Niger Delta, where Ijaw militants have freed the last of a group of hostages they held for five long weeks, Reuters' Tom Ashby reported.

Here is the Reuters story:

U.S. and British hostages freed in Nigeria
By Tom Ashby

LAGOS (Reuters) - Three foreign oil workers, two Americans and a Briton, were freed on Monday after being held hostage by militants in Nigeria for five weeks, a U.S. diplomatic source said.

The three, employees of U.S. oil services company Willbros, were seized from a barge in the southern Niger Delta on February 18 during a wave of attacks in the world's eighth largest oil exporting country that has cut shipments by a quarter.

"They are all in good health," the source told Reuters, asking not to be named.

The rebel Movement for the Emancipation of the Niger Delta had demanded a greater share of the delta's oil wealth, the release of two jailed leaders from the region and compensation for oil pollution as conditions for freeing the hostages.

It was not immediately clear what produced the breakthrough in talks with the kidnappers, but President Olusegun Obasanjo is due to fly to Washington on Tuesday and pressure had been building up for an end to the standoff over the hostages.

Militants, often armed and funded with the proceeds of crude oil theft, roam the mangrove-lined waterways of the delta in speedboats and many areas are off-limits for security forces who have lost control of the region.

The majority of people in the delta have seen few benefits from decades of oil extraction that has yielded billions of dollars in profits for foreign oil companies and corrupt politicians. Authorities often dismiss militants as thieves.

Vast areas of the delta are not connected to the national power grid. There is no clean water in many places. There are almost no roads. Teachers and doctors are in short supply.

The environment has been wrecked by oil spills and the 24-hour burning of gas associated with the extraction of oil.

Mnay analysts say Nigerian governments, during almost three decades of military dictatorship as well as during periods of civilian rule, have seen it as being in their interests to control the oil by keeping the delta poor, divided and insecure.

Sunday, March 26, 2006

Frequently Asked Questions (FAQ) For ERHC Newbies

On the eve of what may be a tremendous explosion of publicity surrounding the rumored Chevron strike in Block 1, here's some background information for those who just found out about ERHC Energy (OTC BB symbol: ERHE):


What the hell is going on?

There's this little company in Houston with three employees and no debt that was granted some oil rights a few years back and now it appears that ChevronTexaco has struck a huge reservoir of oil in a block immediately adjoining one of theirs, and word is that the reservoir runs under theirs, too, requiring payments to them. So for no cost, this little company seems to be about to hit oil without ever having to drill a well. The Wall Street Journal, which has reported the find in a misleading way, said the news will come out "any day now." The price has gone from $0.72 to $0.89 in three days, and looks to be headed a whole lot higher. if the big find that Chevron is supposed to have gets announced. Chevron has said it won't have anything to say until April.

What is ERHE?

ERHE is the symbol for ERHC Energy, the little company that can. It owns rights in three of the most promising blocks of the Nigeria-Sao Tome and Principe Joint Development Zone, a region of the Gulf of Guinea where the tiny island nation of Sao Tome and Principe (pop. 160,000) and the important African nation of Nigeria (population 116 million) share ownership and split royalties on a 40:60 basis. The JDZ, as it's known, was formally set up in early 2002.

Who says there's oil?

A huge cast of characters say there's oil, starting with the Western Geco division of Schlumberger, the United States Dept. of Energy, ChevronTexaco, ExxonMobil and Anadarko Oil, which have already paid some $184 million to find out if they're right. The United States expects to import a quarter of all its oil needs from West Africa by 2010, up from 15 percent now, and most of that would come from these blocks in the Gulf of Guinea.

So what's the deal?

Supposedly, if you buy in to ERHC Energy now, while shares are under a buck, you'll become wealthy in a few years as their rights are exploited in the form of oil and gas. But be forewarned: there are dozens of different people and several different "forces," shall we say, that spread all kinds of misinformation, rumors and lies about the stock. It's hard to really know what's true. But you can say that the people who bought cheaply have made a lot of dough. So far this year, by buying and selling the stock I've made more than $31,000.

And who are you?

I was living in L.A. when I picked up the L.A. Times in May 2003 and read a long front-page story by Ken Silverstein about ERHC, which back then was called Environmental Remediation Holding Corp., because they used to clean up old oil wells in Louisiana and Texas. I got in touch with Ken and asked him if he thought an investment in it would make money, and he said that if all goes well "you should." So I started buying and made $25,000 that year when it went from $0.22 to $0.45.

What's with the blog?

After the L.A. Times story, I felt like there was too much going on in Africa with respect to the JDZ and ERHC Energy's founder Sir Emeka Offor that wasn't being reported anywhere. Conveniently, I got booted off the Raging Bull board when I started posting some of what I found and in response, I started ERHC On The Move. We have anywhere from 1,400 to 2,200 readers a day.

What's with all the obscene messages in old posts?

If you go back seven or eight months, you'll find hundreds of obscene posts in the Comments section of many posts. Most of those were from a woman named Norma Reynolds, known as chcr on the Investor's Hub board, where she is the Moderator. She is an accountant for a Houston oilman named Phil Nugent, whose son Phil Jr. lives in New Orleans. He apparently got pissed off at me when I wrote about him in connection with GEECF, in which he was a major investor and which has turned out to be a big scam.

Who is Phil Nugent?

He introduced the controlling shareholder of ERHC, Emeka Offor, to Gregory Tirman and Sam L. Bass, among other owners of ERHC back in the late '90s, and is one of the company's largest shareholders - he's said to have 20 million shares. Anyway, when Offor took the company over, he hired a p.r. man named John Coleman, who it now turns out was also Nugent's accountant at one time. Like the present p.r. people, Coleman was notorious for refusing to provide any information whatsoever about the company to shareholders - another reason I started this blog.

Where did ERHC's bad reputation come from?

Gregory Tirman, the CEO in 1999, went to Sao Tome to work out a deal with officials there but couldn't. As he was leaving, at the airport, he held a press conference and announced that Sao Tome officials had demanded bribes from him. That got ERHC in such hot water they had to go to arbitration at the International Chamber of Commerce in Paris over the issue of how they would be paid for the seismic data they'd shot for Sao Tome at a cost of $6 million. Just before the decision, though, Tirman - introduced by Nugent - sold his interest to Sir Emeka Offor for $6.1 million. Offor now has some 307 million shares of his own and reportedly controls another 200 million or so of the 710.9 million shares outstanding through his family and extended clan. He is a tribal chieftain and was a political "godfather" in Anambra state, in southern Nigeria, in addition to being a very rich and politically-connected man. In 2002, he donated $100,000 to the presidential campaign of Sao Tome cocoa grower Fradique de Menezes, who then became President of Sao Tome and is up for re-election right now. Offor also engaged various high-ranking Sao Tome officials, including the former Secretary of State, the Minister of Natural Resources and others in employment roles, and paid for the education of the man who later became chairman of the JDZ's operations arm, the Joint Development Authority. The Sao Tome Attorney General, apparently inspired by Anadarko Petroleum and ExxonMobil - who had lost major blocks to ERHC - hired a Tulsa professor of oil law to investigate. He said there were all kinds of irregularities but no evidence to prove wrongdoing, so the President of Sao Tome and the country's delegation to the JDZ's ruling Joint Ministerial Council rejected the attorney general's report. By that time, though, the smear had spread around the world and nothing could be done about it. As ERHC perfected the preferential rights it was guaranteed by the Nigerioa-Sao Tome treaty in 2002, and then was awarded equity in 2005 and finally got contracts to exploit its rights for in March 2006, all of that became irrelevant. Before it did, however, we lost three American partners - mid-tier players, Noble Energy, Devon Energy and Pioneer Natural Resources - and our stock slipped all the way back to $0.26 on Dec. 27, 2005, when Pioneer, the last of those, hit the road (and was replaced by Addax the same day). The three were replaced by Addax Petroleum, a Swiss firm with a lot work in Nigeria,in Blocks 3 and 4, and state-owned Sinopec, the world's sixth-largest oil company and the second largest in China, working with Addax in Block 2.

Where does it go from here?

Up. Personally, I think it's going to about $9.30, but that's just me. A lot of folks would be happy with less. But after the first of some $45.9 million in payments was received on Friday from Addax and Sinopec for some of our equity, there may not be any money at all coming in until we have paid back their costs of exploration to first oil. The big "unless," of course, is "unless" someone wants to shell out about $6 a share for our rights.

Who pays you?

I make all my money trading; no one pays me - not even the government!

How many shares do you own?

None at the moment, but I hope to buy some in the morning.

Source Who First Told of Chevron Strike Says Drillships Have Moved; Geologist Says News Is Imminent; French News Agency Cites 'The Business' On Find

When ERHC On The Move first broke the story of a big find by ChevronTexaco in Block 1 of the Nigeria-Sao Tome and Principe Joint Development Zone back in early February, our source was an independent energy consultant with friends aboard the drillship that was sinking the OBO-1 test well.

The news was quickly followed by reports from Jacinta Moran at Platt's and Barry Morgan at UpstreamOnline, and the rest is history.

Now, from the Wall Street Journal to the Financial Times, the story is getting out to everyone, and the original source of the news continues to celebrate.

Here is his latest note, like his first with the heading Big Oil:

I mentioned way back that it was there and I expect a lot more PR`s to come. My friend that works for CVX in San Francisco tells me we`ll hear news of loggings from CVX this month. He still states that its big and drillship has moved to new location and started drilling already.

Best Regards,

The latest from our geologist friend - who owns several hundred thousand shares and has made nearly $250,000 so far - is that the Chevron news may be imminent:

Dear Joe, I think that something v. big is getting ready to happen vis a vis the Obo-1, heard from a friend in the industry who is down in the New Orleans area, maybe you can check it out thru your research sources, it is supposed to be very big news imminent, also i will be traveling between April 13 to April 23 into your area , perhaps a hookup?

Meanwhile, Agence France-Presse is citing The Business as its source for news that Chervon and Exxon have struck "big oil" in the Gulf of Guinea adjoining ERHC/Sinopec's Block 2:

AFX News Limited
Chevron, Exxon in major oil strike in Africa - report
03.26.2006, 11:41 AM

Most Popular Stories

LONDON (AFX) - US oil giants ChevronTexaco Corp and Exxon Mobil Corp have made a major oil discovery in the West African island state of Sao Tome and Principe, The Business newspaper reported, citing an unnamed source.

The oil was found in the offshore Obo-1 well. Drilling results showed the hole could be holding more than a billion barrels worth of oil and gas.

The pair are to meet on Tuesday to plan their next moves, the article said.

Chevron is the operator of the field with a 51 pct stake, while Exxon holds 40 pct. The remaining 9 pct is owned by Nigeria's Dangote Energy Equity Resources and Afren.


But for the time being, we are working on the assumption that an article in The Business was not in error when it reported on Friday:

The companies would not be able to confirm the full extent of the discovery until they had drilled more wells. It took four wells before the full extent of the Akpo field had been proven.

See the full text of that story a few posts below.

Houston Chronicle: Exxon Spill In Houston Got Slow Response; What Can Niger Delta Victims Expect?

When U.S.- and European-based multinational oil companies like Exxon, Chevron and Shell are charged with polluting the landscape in the Niger Delta, many international observers are quick to excuse the giants from responsibility.

Frequently, the rebels who have assaulted and kidnapped workers and regularly destroy pipelines or siphon oil from them are blamed, and often they are indeed the obvious culprits.

But as an article in the Houston Chronicle today demonstrates, that is not always the case. The paper lays out the tale of a spill on Jan. 23 that coated a Houston-area neighborhood near a leaking Exxon facility in Baytown with a thin cloud of oily residue - enough that when neighbors went to open their cars, their hands slipped off the handles. Obviously, it was in the air and by then, probably in their lungs. What was it? Could it kill them?

At 2:48 p.m. in the afternoon, a resident called the right federal hot-line and filed a report to state and federal authorities. Although eight copies of the report instantly went out to as many agencies, the response was agonizingly slow. Not until Wednesday did an inspector come out to the neighborhood to see what the fuss was all about.

What started out as an exercise in citizen activism for which authorities had created a path for citizens to reach responsible officials - and should have been a model for emergency response - turned out too much like Katrina. There was too little, too late, and despite the well-laid plans the result was a human disaster.

In telling that story, the Houston Chronicle today perhaps sheds light on light on what the company's typical response to pollution incidents really is - in the United States, that is.

But what of such spills in Nigeria? Among the mangrove swamps and grassy wetlands that are home to millions of Africa's poorest people, there is no Internet access. There are no well-organized crews at the ready to perform hazmat duties as there are in Houston. There is no easy route to top public officials. There are few who can read and write well enough to communicate complex issues, and fewer still who will listen.

The point? Perhaps the multinationals like Exxon who do business in the Niger Delta bear more of the responsibility than they have admitted for the profoundly polluted Delta region. If they can get away with a lackadaisical attitude in suburban Houston, what can they get away with in a remote mangrove swamp 6,000 miles away?

Meanwhile, study for a moment the opening words of this article, from Britain's respected The Guardian last year:

Revealed: how oil giant influenced Bush
White House sought advice from Exxon on Kyoto stance

John Vidal, environment editor
Wednesday June 8, 2005
The Guardian

President's George Bush's decision not to sign the United States up to the Kyoto global warming treaty was partly a result of pressure from ExxonMobil, the world's most powerful oil company, and other industries, according to US State Department papers seen by the Guardian.

The company had the power to stop the most important international treaty of our time, one that is intimately tied to future weather patterns and especially the destructive hurricanes like Katrina that are partly fueled by earth-warming combustion of Exxon's fossil fuels.

Exxon's power - and that of the other oil giants - actually threatens the entire world, as outlined in a frightening cover story that breaks tomorrow in Time Magazine. But what citizen of the world, and what world institution, actually has the power to resist the corrupting influence of a company that pockets $36 billion in profits in a single quarter?

Meanwhile, it seems to have no compunction about defrauding even the U.S. states where it operates. In this report from the BBC, look at what an Alabama judge said about Exxon:

Friday, 4 May, 2001, 17:18 GMT 18:18 UK
Exxon fined $3.4bn for 'fraud'

A judge in the US has upheld a $3.4bn (£2.37bn) fine against Exxon Mobil, the world's largest oil company, for deliberately underpaying natural gas royalties to the state of Alabama.

"Exxon engaged in egregious, intentional fraud by which it sought to deprive Alabama of hundreds of millions of dollars, probably well over $1bn," an Alabama Circuit Court judge wrote in an order signed on Thursday.

"Exxon has shown no contrition or even changed its royalty payment calculation. Only a substantial punitive award can punish Exxon and deter it and others," the judge added.

Moreover, Exxon has even defrauded its own hard-working gas-station owner-operators:

Supreme Court decision may lead to Exxon dealers' profit
South Florida Business Journal - October 12, 2004

With the U.S. Supreme Court's decision to decline to accept Exxon Corp.'s appeal of class certification in a $1.3 billion class action case brought by its dealers, certain Exxon dealers may soon receive an average $130,000.

At a February 2001 trial in Miami federal court, attorneys for the class said they proved to a jury that Exxon overcharged its service station owners for the wholesale price of motor fuel for 11 years and then fraudulently concealed the overcharges.

The suit involved 10,000 current or former dealers who owned or operated Exxon service stations between March 1983 and August 1994 in 34 states and Washington, D.C.

The 11th Circuit Court of Appeals later affirmed the verdict and orders of the trial court.

If a well-heeled American state like Alabama and its own dealers have to struggle mightily to keep Exxon from stealing them blind, if they can block important treaties with a word to their friends in high places, how does a community of largely illiterate, culturally unsophisticated and dead-broke activists deal with a giant like Exxon after it has polluted its landscape, used its influence to eliminate their leadership, and resolutely defrauded state and local governments of oil royalties?

It's not just a problem for the Niger Delta's Bayelsa State or the State of Alabama. How much more would it defraud the corrupt governments around the world? And what can anyone do about it?

I'd hope that readers today would look at the Houston Chronicle's story in that context. Here it is:

March 26, 2006, 3:52AM
Flawed response to Exxon spill exposed
When a neighbor reported leak, no help came

The Houston Chronicle

For six years Felicia Joseph lived beside one of the nation's largest oil refineries — and not once did she complain about pollution.

"It's like living near a bakery," said the 34-year-old hairdresser. "You know you are going to smell baked goods. You pretty much know what you are up against."

But when she awoke Jan. 23 to find her Baytown neighborhood shrouded in an odd gray mist and her car covered with so much oil her hand slid off the door handle, Joseph called for help.

No one came.

A Houston Chronicle investigation shows that Joseph's call to a federal hot line at 2:48 p.m. that Monday — more than 14 hours after oil began leaking from the Exxon Mobil refinery next door — spawned a series of e-mails and telephone calls that traveled from Washington, to Dallas, Austin, and Houston. Within minutes, eight different federal and state agencies received copies of a report that said an unknown oil, likely from the refinery, was all over cars at the Archia Courts public housing complex.

Yet, not one public official arrived in the neighborhood until Wednesday morning. And that was only after Exxon — which initially reported that the spill had been contained on site — disclosed to the state Tuesday night that the leaking substance had left the refinery premises.

Using public records and interviews with various federal, local, state and company officials, the Chronicle pieced together a chronology of the incident to determine who knew about the spill and when.

The chain of events exposes serious flaws in the local and national systems put in place to respond to oil and chemical spills that have the potential to threaten public health or the environment.

Chief among them is that the laws governing what is reported to the National Response Center leave room for a spill like the one in Baytown to be missed. Moreover, the bureaucratic maze of overlapping state and federal reporting systems, coupled with a lack of personnel to review the reports, makes it easy for a complaint to get overlooked, as Joseph's was.

Such problems are of critical concern in Texas — home to the most industrialized corridor in the United States — and Harris County, where more spills occur than anywhere else in a five-state region.

The Chronicle's analysis also clearly demonstrates that Exxon knew the incident entered the community on Monday. The refinery's plant manager told Baytown Mayor Calvin Mundinger of the incident around 3 p.m. during a monthly economic development meeting.

Under investigation

Exxon did not tell the Texas Commission on Environmental Quality about the offsite impact until about 6 p.m. Tuesday.

The company is under investigation by the TCEQ for failing to notify the state within 24 hours of discovering the spill had affected a neighborhood, as required.

By the time county and state investigators arrived at Archia Courts on Wednesday morning, it was too late. Contractors hired by the oil giant had spent Tuesday scrubbing the process gas oil that was showered on houses and cars from one of Exxon's massive storage tanks across the street.

The company's own safety information reveals that process gas oil, a close relative to crude oil, can irritate the skin after prolonged exposure.

"I knew exactly who to call," said Joseph, who dialed information and asked for the number of the U.S. Environmental Protection Agency after returning from errands and seeing a half-dozen Exxon Mobil workers walking along the neighborhood's streets.

The EPA operator directed her to the National Response Center, a Washington, D.C.-based clearinghouse set up in 1968 to ensure that oil-spill cleanups are done in a timely manner to minimize threats to human health and the environment.

'Waste of time'

"I called them, and they didn't do anything," Joseph said. "It was a waste of time."

The local communication system for spills also broke down. Despite 1995 guidelines established by the company and city officials that say a call should be made in emergencies and nonemergencies that cause a public concern or impact, Exxon Mobil never reported the spill to local law enforcement.

If Exxon had followed those guidelines, the fire department or local police likely would have responded, Baytown officials said.

"Why didn't the city get notified on this? Frankly, I think someone just dropped the ball," said Malcolm Swinney, the city's communications coordinator. "This definitely fit within the guidelines that they should have called us."

An Exxon spokeswoman said the incident did not require the city's assistance. She added that although the guidelines suggest the company should place an informational call, the decision to do so is a "courtesy."

"The strategy for us in this case was to handle it face to face,"said Jeanne Miller, a spokeswoman for the company's Baytown operations.

Report sat overnight

Joseph's complaint reached the Houston office of the TCEQ, via e-mail, at 4:45 p.m. Monday. But the Chronicle's analysis shows that the report sat overnight until the lone person who reviews National Response Center reports — and who is responsible for fielding emergency calls from 13 counties — got in the next morning. The regional office receives between 30 and 100 spill reports from the center on any given day.

"It's a resource problem," said Jim Indest, the leader of TCEQ's emergency response group in the Houston region. "We only have one person reviewing these things."

After Indest's group reviewed the report Tuesday morning, more than 24 hours after the event, no one recognized that it was the same spill Exxon Mobil reported a day earlier. The company said the impact was "land only, within the facility."

On its own, Indest said, Joseph's report did not look like a serious situation.

"Now, if we knew that it was related to the spill and the amount of the spill was the amount that we knew ... but we had no way of knowing that the tank that Exxon called in sits next to a neighborhood. There was no way to put the two together," he said.

Instead, the complaint, which described the release as an air pollution event, was forwarded electronically to the Houston region's air quality section. But no one who works in that area at the Polk Street office remembers receiving it.

"I can't find anyone in my group that would normally manage this kind of information who recognizes it," said Marsha Hill, the air section manager. "What should be happening is that we should recognize in a report like this a need to respond."

None of the other agencies that received a copy of Joseph's report responded either. It reached the EPA, the Texas General Land Office, and the state Department of State Health Services. Later, when asked whose job it was to act on such a report, each pointed to a different agency.

The General Land Office, according to Jim Suydam, a spokesman, needs to "have oil in the water for us to go. That was a TCEQ deal."

The Texas Department of State Health Services in Austin, which received an e-mail at 2:53 p.m. on Monday, the time many other agencies also got word, only uses such information for research. Its research grant bars it from collecting information on petroleum product spills.

According to state and U.S. Coast Guard officials, the Archia Courts incident was the EPA's responsibility. The agency is the only one that received an actual telephone call from the National Response Center. It came into the agency's Dallas headquarters at 2:54 p.m. Monday.

Not covered by laws

But the Exxon incident, which released oil into the air and impacted only land, was not covered by the five federal laws that dictate what must be reported and responded to through the National Response Center.

The complaint was immediately reviewed at EPA headquarters, where the phone duty officer determined the agency did not have the authority to respond because the oil "did not cause or have the potential to cause an oil sheen on waters of the United States."

For that same reason, Exxon was not required to report the spill to the federal spill hot line.

"According to our environmental guys, process gas oil ... is not a reportable substance," Miller said. "It did not spill into water."

In fact, while other laws require a suite of chemicals to be reported to the federal hot line, none of those cover oil.

Sam Coleman, director of the EPA's Superfund division, admits that a traditional reading of the regulations has gaps. But the agency continues to explore the incident, "to better understand what, if any, reporting requirements may or may not have been met," he said.

EPA officials said residents' best bet is to contact local authorities.

But in the Exxon case, that pathway failed, too.

A review of all 911 and nonemergency phone calls to the Baytown Police Department on Jan. 23 shows that no residents or company official called in the spill.

"Had we heard from neighbors, I feel confident that at some level — at least the fire department — would have driven out to the scene," City Manager Gary Jackson said. Jackson said he learned of the incident around 10 a.m. Tuesday when he was handed a written message saying that Exxon spokeswoman Miller had called. Miller said she telephoned city administration Monday.

Baytown Fire Chief Shon Blake didn't learn about the spill until he received a call on his cell phone from an Exxon Mobil official between 6 p.m. and 7 p.m. Tuesday.

Swinney, who is in charge of the city's communications, read about it in the newspaper Wednesday.

Mayor has 'faith' in Exxon

The earliest anyone in Baytown government knew about the release, according to the Chronicle's investigation, was late Monday afternoon, when Mayor Mundinger was told by Exxon's plant manager at the meeting. The mayor said he was confident Exxon was taking care of the problem, despite not reporting it through normal channels.

"This wasn't an ammonia release. It was an oily, greasy substance that got on some houses and cars," Mundinger said.

"I have a lot of faith that when Exxon has a problem they move quickly and swiftly to deal with it. There may have been a glitch in reporting, but I know there were people on site immediately trying to remedy the situation as promptly as possible."

Felicia Joseph said Mundinger's response illustrates why she chose to call the federal government rather than rely on local officials.

"These people do not care, plain and simple," said Joseph, who wants to move from the housing project.

She also doesn't subscribe to the EPA's other recommendation, calling the company, even though calls from neighbors to Exxon Mobil after the incident informed the company of the mess and led to a cleanup.

"What am I going to call the company for?" Joseph said. "That would be like calling a hit-and-run driver and saying, 'You hit my car.'"

Saturday, March 25, 2006

Scotland's Sunday Herald: 'Reserves under the Gulf of Guinea may yet prove to be bigger than anything yet discovered'

Scotland's Sunday Herald: ' Reserves under the Gulf of Guinea may yet prove to be bigger than anything yet discovered'

In an excellent and profoundly well-informed article by its Johannesburg correspondent Fred Bridgland, Scotland's Sunday Herald this morning reports - amid a long analysis of Nigeria's stability and corruption issues - that the Gulf of Guinea may hold more oil than any other reservoir heretofore discovered on earth.

The claim is not well-supported, but given the context and surrounding information, it is believeable.

Here is an exceptional article for all who want to understand the risks of investment in the Gulf of Guinea and the tremendous rewards that may spring from peaceful exploitation of its recources:

Big oil and the troubled waters of the Niger Delta
From Fred Bridgland in Johannesburg

A LITTLE over 10 years ago, the Ogoni writer and environmentalist Ken Saro-Wiwa made world headlines when he was executed by Nigeria’s military dictatorship in the middle of a Commonwealth summit in New Zealand – despite all the leaders’ appeals for mercy.

At the time, Ron van den Berg, the Shell Oil Company’s managing director in Nigeria, commented to London-based specialist intelligence publication Africa Confidential, that the executions of Saro-Wiwa and eight of his fellow ethnic Ogonis – activists against the despoliation of the Niger River Delta by international oil corporations – would enhance Nigeria’s stability and avert civil war.

Contrary to Shell’s hopes, Saro-Wiwa and his martyrdom placed the worsening political and environmental crisis of the oil-rich Delta at the centre of national politics. It has stayed there, and now the calamity is greater than when Saro-Wiwa went to the gallows. The Delta is more violent, more anti-central government militias and criminal gangs led by warlords operate there, and they are much more heavily armed and more ruthless.

Rebels On Patrol in the Niger Delta of Nigeria are stimulating security pacts between Nigeria, the United States and China that would protect oil interests there. Meanwhile, a Chevron well in the Nigeria-Sao Tome and Principe Joint Development Zone and articles in major European newspapers are hinting at one of history's biggest oil finds - perhaps the biggest - a hundred miles offshore in areas rebels can't reach. Even as these young Ijaw men face well-trained navies and reduced drilling activity, the money flow seems to be moving away from them, too.
Photo: The Punch of Nigeria

At government and military levels, corruption and fraud in the acquisition and selling of oil and gas has exacerbated the crisis. The poverty-stricken people of the Delta, championed by Saro-Wiwa, continue to suffer impoverishment, unemployment and the pollution by oil firms of their once pristine homeland.

Discontent is so heavy in the Delta that a major escalation of the current low-level civil conflict, which takes some 1500 lives a year, could have unpredictable consequences for an inherently unstable country, the most populous in Africa, with some 140 million people divided into more than 250 ethnic and language groups.

The consequences of such an escalation, which some American writers are predicting will become the “new Iraq” – an over-exaggeration at the moment – would indeed be serious for Western economies and for the world as a whole.

With Nigeria and its Delta oil reserves at the hub, countries in the armpit of West Africa – where the north-stretching coastline turns westwards around the Gulf of Guinea – are expected to supply 20 to 25% of the United States’ oil imports by 2010, putting the region ahead of Saudi Arabia as a source of American oil supplies.

It makes the Niger Delta and its people’s struggles against the Nigerian government and Big Oil one of the most strategically important places on earth, and the big powers are wracking their brains to try to ensure that nothing disrupts the flow of West African oil.

A recent report on the future of sub-Saharan Africa, published by the US government think tank the National Intelligence Council, identified the collapse of Nigeria as the most important risk facing Africa today.

“While currently Nigeria’s leaders are locked in a bad marriage that all dislike but dare not leave, there are possibilities that could disrupt the precarious equilibrium in Abuja [Nigeria’s capital],” the report said.

“If Nigeria were to become a failed state, it could drag down a large part of the West African region.”

Amid the deadly ethnic and religious tensions and chronic corruption which pervades all life in Nigeria, the West’s immediate fear is of political meltdown at next year’s presidential and parliamentary elections, which are always studded with violence and communal and regional hatreds.

Last year, at a US-organised security conference in Abuja, General Carlton Fulford, former deputy commander of the US European Command, which includes Africa, called for a coordinated central international security agency for the Gulf of Guinea, with Nigeria playing a significant role.

He did not spell out what military supplies Washington had already sent to Nigeria’s president Olusegun Obasanjo, but he suggested that the coordinating agency should be given radar devices and unmanned airplanes for surveillance of the Delta and offshore oil and gas fields.

In an attempt to quell the rebel groups in the twisting creeks and tangled swamps of the Delta – at 15,000 square miles one of the largest wetlands in the world – the Nigerian army and navy are buying former US coastguard patrol boats. But security experts reckon some 200 such boats will be needed to control the rebels and the “bunkering”.

Bunkering is the widespread rebel practice of tapping into pipelines and siphoning oil into barges, modified to become makeshift tankers, lurking in the mangrove swamps. The tankers ferry the oil to rusting sea-going tankers, registered in Ukraine and Albania, chartered by Lebanese middlemen and anchored offshore. Some 15% of Nigeria’s oil production disappears this way. The whole exercise requires complicity by senior military and government officials who turn a blind eye to the slow passage of the barges from the Delta into the open sea.

By some estimates, this illegal trade is worth more than Colombia’s entire drugs trade. Last month armed groups kidnapped nine foreign oil workers, set pipelines on fire and disrupted a major export terminal. Nigerian oil output is down 20% so far this year as a consequence of rebel attacks.

West African oil is being treated by the US as a major strategic asset. The reserves under the Gulf of Guinea may yet prove to be bigger than anything yet discovered elsewhere. Nigeria alone plans to more than double its oil production from 2.5m barrels a day to more than five million barrels by 2010, and foreign oil companies have investments planned totalling $33 billion.

What makes the whole proposition even more attractive is the fact that Nigeria is nearer America than the Middle East, and the oil is of higher quality – lighter and “sweeter” than that produced in the Middle East.

A major conference by the African Oil Policy Initiative Group, including top US government representatives and business and think tank executives, recommended that Congress declare the Gulf of Guinea an area of “vital interest” to the US and establish a regional sub-command – similar to US Forces Korea – in the region, with headquarters possibly on the islands of Sao Tome and Principe.

“There is a need to reshape a new US national security policy for sub-Saharan Africa based on a West African regional economic engine driven by large petroleum revenues from producing states such as Nigeria, Angola, Equatorial Guinea, Gabon and Congo Brazzaville,” the group concluded.

“Nigeria, especially, as Washington’s largest African trading partner and despite its difficulties with governance and transparency, could emerge as the pivotal actor, regional economic engine and stabiliser. By providing the US and other markets with a steady and secure flow of high-quality, reasonably priced African crude, dependence on hostile or unstable suppliers in other parts of the globe would diminish.”

But to secure this outcome while avoiding some future nightmarish Western military intervention to protect oil supplies, the social crisis of the Niger Delta will have to be solved by non-military means.

At present the five Delta states, the source of all of Nigeria’s oil, receive only 13% of the oil revenues. The rest goes to the central government. The Delta’s 22m people live in dire poverty among widespread pollution, which some allege has been created by companies such as Shell and Chevron. This pollution is said to have had a negative impact on the traditional fishing grounds. The revolt against Abuja grows by the day.

“Nigeria is like a country sitting on a keg of gunpowder,” said Nalaguo Chris Alagoa, who runs the Nigeria branch of the Paris-based conservation movement Pro-Natura International. “The Delta’s resources are what supports the whole country. The fuse is getting shorter and the day it explodes Nigeria will go to pieces.”

During the last quarter century, Nigeria’s leaders have looted hundreds of millions of dollars in oil revenues to foreign bank accounts while per capita income has dropped from around $1000 to less than $400.

Shell and Chevron say that nowadays they run major development projects to help the Delta communities. Shell’s spokespeople say the company spends $60m a year on community development, one of the largest corporate aid projects in the world.

But Africa Confidential recently visited Oloibiri, the small town that hosted Nigeria’s first oil well some five decades ago, and noted: “Oloibiri is a potent symbol of the oil industry’s failures. There is no power or running water in Oloibiri and few visible signs of progress. A clinic and hospital, built by Shell, stands empty for lack of staff and equipment.”

26 March 2006

Treating Rumor As Fact, 'The Business" Says Chevron Hit A Billion-Barrel Strike In Block 1, But Financial Times Gets Facts Right

Relying only on a single unnamed source who allegedly said he's seen the closely-held OBO-1 test well results, an online business publication called The Business reported today that Chevron and Exxon have hit a large oil deposit in Block 1 that looks to be a billion barrels in size.

The article by reporter Richard Orange is apparently part of the effort to pump up the price of ERHC Energy, Equator Exploration and other companies that have equity in Blocks 1, 2, 3 and 4, all of which abut Chevron's Block 1 in the Nigeria-Sao Tome and Principe Joint Development Zone. There was no mention of the find straddling other blocks, though.

But contrary to the misinformation that drove share prices up $0.10 in Friday's trading, Chevron reiterated that it would not have results for public release until April. Other wells have to be drilled to determine the true extent of the find, The Business reported.

Pumper Mark St. Amour of Nashville said on the Investor's Hub ERHE Message Board five minutes before the opening bell that the Joint Development Authority told him (on a day when it was closed) it would issue a press release concerning the find on Monday.

But the I-Hub board is regularly censored by Norma Reyolds, the acccountant known as chcr who works for ERHC's largest American shareholder, Houston oilman Phil Nugent. A lawyer that represents both wrote us recently to request that we discontinue mentioning her name, but we felt her role in ERHC Energy's perception by investors is too great to permit such secrecy.

A person familiar with relationship said it was Reynolds, in fact, that bombarded this site with thousands of obscene emails last year at the urging of Nugent, who was offended by our coverage of his role in the GEECF scandal as reported last year by Barron's, the business weekly published by Dow Jones.
That mail-bombing, a violation of the Interstate Commerce Act as well as securities laws, is the basis for a recent complaint to the FBI in Tampa, Fla., which assigned an agent to the case that in turn has recently contacted ERHC On The Move.

Here is the article posted to I-Hub on Saturday, and first published March 22 in The Business:

Chevron and Exxon strike it big in Africa
By Richard Orange
26 March 2006

US giants Chevron and Exxon Mobil have made an African oil discovery that could hold more than a billion barrels worth of oil and gas.

The find promises to be one of the largest finds this year, potentially opening up a new province off the shore of the West African island state of São Tomé and Principe.

A source who has seen the results told The Business that the Obo-1 well, completed on 15 March, had found oil and gas in significant qualities. He said: “It is an encouraging result. Everyone is pleased.”

Geological studies of the prospect suggest it could hold even more oil and gas than the Akpo field in the Nigerian waters to the north, which is thought to have recoverable reserves of more than a billion barrels.

The source said Chevron and Exxon would meet on Tuesday to plan their next moves. He said Chevron, the operator of the field, had not yet decided when it would drill more wells to prove the exact size of the recovery.

There is a severe shortage of oil rigs off West Africa, where the field has been discovered, making it extremely expensive to drill further at short notice.

The companies would not be able to confirm the full extent of the discovery until they had drilled more wells. It took four wells before the full extent of the Akpo field had been proven.

Another source said the consortium was still examining the data and was unlikely to agree on how to release the result until April.

Chevron is the operator of the field with a 51% stake, Exxon holds 40%, with an alliance of Nigerian oil companies Dang-ote Energy Equity Resources and Afren holding the remaining 9%.

The discovery will turn São Tomé into the oil industry’s newest resource-holder. The 160,000 inhabitants of the tiny former Portuguese colony could see their lives transformed in a way that has sadly eluded the inhabitants of the far more populous Niger Delta to the North – so long as São Tomé’s rulers manage to prevent a corrupt few siphoning off most profits.

Campaigners for transparency in oil producing countries were optimistic about São Tomé after the country put into place a petroleum law modelled on that of Norway, with transparency over oil revenues and an oil fund for future generations.

Sadly, the awards of other licences to drill in São Tomé have already shown significant irregularities, with squabbles between Nigerian and São Tomé officials delaying the awards.

A report by São Tomé’s attorney general said the recent bidding rounds were subject to “serious deficiencies and political manipulation”.

São Tomé signed its deal with Nigeria in 2001, after years of dispute over the maritime boundaries between the two states.

Under the agreement, São Tomé keeps 40% of state revenues from any discoveries and Nigeria keeps 60%.

Meanwhile, a well-sourced article from Dino Mahtani of the Financial Times has the the all facts right except our current corporate name:

Sao Tome - where the champagne swills in before the oil gushes out
By Dino Mahtani in São Tomé
Published: March 25 2006 02:00 | Last updated: March 25 2006 02:00

On the tarmac of a sleepy airport on a tiny tropical West African island a private jet unloads boxes of champagne - an early sign that preparations are under way for an oil boom.

The impoverished and aid-dependent archipelago state of São Tomé and Príncipe may be home to only 160,000 people, whose main exports include tourism, cocoa and phone sex lines, but it also sits on one of the world's oil exploration hotspots.

With President George W. Bush keen to diversify US energy needs away from the Middle East, São Tomé could soon become a big factor in US energy policy in the Gulf of Guinea, which already accounts for about 15 percent of US imports.

Any time soon, Chevron, the US oil giant, is expected to announce the results of the first oil well drilled in a joint development zone (JDZ) bringing São Tomé together with neighbouring Nigeria, Africa's biggest oil producer.

Once a disputed territory, the JDZ was born out of a negotiated settlement in 2001, splitting profits 60 per ent in favour of Nigeria and 40 per cent for São Tomé and Príncipe.

With three more contracts signed this month to develop more acreage in the JDZ, São Tomé's politicians, who contest parliamentary elections tomorrow, will be eyeing the $49m (€41m, £28m) initial payment by Chevron and its consortium last year, and the tens of millions more expected from the new contracts. São Tomé's entire national product was an estimated $70.5m last year.

But while some members of the São Toméan political elite prime themselves for a champagne uncorking frenzy, they may simultaneously be considering the damage done to the JDZ's credibility through infighting between lobbies representing different political and business interests on the island, in Nigeria, and elsewhere.

Those involved in the two JDZ licensing rounds in 2003 and 2004 say the haggling could have delayed oil production by several years.

Late last year, São Tomé's attorney-general released an unsolicited report saying the latest licensing round was "subject to serious procedural deficiencies and political manipulation". The report also alleged São Tomé had been pressured by Nigeria to sign off on licensing awards favouring certain business interests. This prompted a fierce rejection by Nigeria.

Over the past few months, three US companies that won licences under the 2004 round to operate oil blocks in the JDZ withdrew from the process after delays over signing contracts. They were replaced by China's Sinopec and Addax, a Canadian listed company with strong ties to Nigeria. The new operators have less experience in offshore drilling than the three US companies.

Binding and at the same time complicating the relationship between Nigeria and São Tomé is the role of Environmental Remediation Holding Corp (ERHC), a small and inexperienced Houston-based oil company.

In exchange for $5m in 1997, ERHC was awarded unusually favourable terms, by industry standards, in São Tomé. Its rights were renegotiated by successive São Toméan governments, but it still took shares in five of six oil blocks awarded so far in the JDZ, as well as exemptions on paying initial signature fees to São Tomé.

Emeka Offor, a Nigerian businessman at the time close to Olusegun Obasanjo, Nigerian president, acquired control of ERHC when São Tomé was in arbitration with the company, just before São Tomé and Nigeria resolved their territorial dispute to create the JDZ.

ExxonMobil, the biggest US oil producer, also acquired favourable rights in São Tomé in the late 1990s, but did not take them up in blocks where ERHC would be present. Pro-Exxon lobbies have subsequently tried to discredit the process.

Political infighting between lobbies representing oil companies may provide the biggest threat to the JDZ. "The disruptive influence is the inherited problem São Tomé has with third parties," said Hassan Tukur, a senior Nigerian foreign ministry official and once a director at the JDZ.

Even seasoned politicians admit the political system is breaking down partly through the effect of inflows of money into different campaigns reflecting divided loyalties on the island. The island has already seen six prime ministers and an unsuccessful coup since President Fradique de Menezes took office in 2001.

A law designed to limit government spending from oil receipts could be the only brake on the political system being completely dominated by cash, which would hobble the ability of any government to function equitably.