Sunday, March 19, 2006

Lusa: Blocks 5 And 6 Could Be Signed 'Within Weeks.' Sao Tome Says

The remaining two blocks from the 2004 Licensing Round of the Nigeria-Sao Tome and Principe Joint Development Zone may be signed off within weeks, Sao Tome's oil minister said Friday.

The Portuguese news agency Lusa, usually anxious to jeer at ERHC Energy, wrote of the awards without mentioning the winners! It might be concluded that the new agency is a poor loser; it has spurred a lot of resentment in Sao Tome over ERHC Energy's success, and now that we have overcome Lusa, too, the news agency doesn't want to admit they were wrong.

Here is their latest take on the deals, using information coming from the jubilant Sao Tome side, which will get $80.4 million from the $201 million in signature bonuses paid by ERHC's partners and co-explorers in JDZ Blocks 2, 3 and 4, the three blocks for which PSCs were signed last week:

17-03-2006 11:40:00. Fonte LUSA. Notícia SIR-7828950

Sao Tome: Gov't confirms deals on three offshore oil blocks

Sao Tome, March 17 (Lusa) - Nigeria and Sao Tome and Principe concluded accords with energy firms to develop three oil fields in the two countries` Joint Development Zone (JDZ) this week and a remaining two offshore blocks could be wrapped up "within weeks", officials have announced.

Deolindo da Costa, Sao Tome's oil minister, told Lusa that production sharing contracts (PSCs) in deepwater Blocks 2, 3 and 4 had been signed Tuesday and Wednesday at a meeting of the Joint Ministerial Council (JMC) in Abuja.

Signature bonuses to the two countries from these blocks are worth about USD 200 million, with these receipts being split 60-40 in Nigeria's favor under a bilateral accord to set up a Joint Development Zone (JDZ) in 2001.

The offshore oil fields were originally awarded in May 2005 as part of a five-block licensing round that was held up due to disputes between the two countries and allegations of corruption in the process.

Blocks 5 and 6, carrying combined signature bonuses of USD 82 million, remain to be concluded and Sao Tome's oil minister told Lusa that PSCs for the outstanding fields could occur "within weeks".

An earlier JDZ licensing round in 2003 awarded one deepwater block to US oil giants ChevronTexaco and ExxonMobil.

Test drilling on one well in this block ended last week and results have yet to be announced, officials said this week.



Although there's nothing new in it, the Guardian of Nigeria also has a March 17 story on the split of bonus fees. Here is an excerpt:

JDZ; Nigeria to share $201m with Sao Tome and Principe

By Yakubu Lawal

NIGERIA and the Republic of Sao Tome and Principe are to share the sum of $201 million being the signature bonus to be paid for three new oil licenses awarded to local and foreign companies yesterday. The income came from the award of three oil blocks two, three and four, located in the Joint Development Zone (JDZ) of the Gulf of Guinea.

Block two was awarded to China's Sinopec International Petroleum and the ERHC/Addax Petroleum consortium for a signature bonus of $71 million, while Block three was awarded to U.S. oil firm Anadarko (the operator of the block) along with ERHC Energy/Addax Petroleum consortium for a signature bonus of $40 million. Block four went to the Addax/ERHC Energy consortium along with Conoil Producing, Overt Energy, Hercules Energy and Godson Energy, for a signature bonus of $90 million. The companies are to pay the amount within the next 30 days.

According to the treaty signed by the two countries, Nigeria will get 60 per cent of the revenue and Sao Tome, 40 per cent.

Speaking at the signing of the Production Sharing Contract (PSC) agreements with the contractors in the two blocks, Nigeria's Minister of State for Petroleum Resources, Dr. Edmund Daukoru commended the Joint Development Authority (JDA), the body administering hydrocarbon resources in the zone, officials of the two countries and the oil companies for ensuring that the agreements were finally concluded and signed.

According to Daukoru, concluding the award of the acreage had not come easily where at a point during the negotiations, U.S. oil firm Noble Energy withdrew its operatorship of block four, leading to ERHC Energy (in which local firm Chrome Energy has a major stake), signing a memorandum of understanding with Swiss firm, Addax Petroleum.

"Negotiation of a PSC is by no means an easy task, as it involves exhaustive and careful discussions to arrive at a consensus which all parties will have to abide for a very long time," said Daukoru.

And as a bonus for reading this far, here's a useful post I-Hub Saturday night detailing the weekly closing share price of ERHE since Jan. 6. Note that there has yet to be a down week since then. Just 100,000 shares purchased at $30,0000 improved to $89,0000 in that time. After short-term gains, winners took home $41,200 of that:

Weekly sp since drilling started in OBO-1

13-Jan-06 0.30
20-Jan-06 0.33 +.03
27-Jan-06 0.34 +.01
3-Feb-06 0.48 +.14
10-Feb-06 0.48 +.00
17-Feb-06 0.72 +.24
24-Feb-06 0.75 +.03
3-Mar-06 0.81 +.06
10-Mar-06 0.84 +.03
17-Mar-06 0.89 +.05

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