Friday, April 07, 2006

Blocks 7, 8 And 9 To Be Re-Bid, Sao Tome Oil Chief Says

Both the Portuguese news agency Lusa and the French agency Agence France-Presse are reporting this afternoon that the last three remaining blocks of the Nigeria-Sao Tome and Principe Joint Development Zone have been withdrawn from bidding by the Joint Development Authority and may no be re-bid for another "six or seven years."

The news actually concludes the Nigeria-SRSTP Licensing Rounds that have caused huge amounts of controversy and dissension but were eventually resolved to most parties' satisfaction.

What may be the most important outcome of the announcement is that the Sao Tome Exclusive Economic Zone now comes up for licensing next year, the ANP chief said. ERHC Energy has substantial rights there, although there appear to be legal issues facing the company before its exctensive equity can be awarded. Those revolve around the terms of contracts with third parties, including a South African company called Procura, that existed before the Joint Development Zone was created.

Here is the report, which does not reference any source on the other side of the equation, in Nigeria:

07-04-2006 12:51:00. Fonte LUSA. Notícia SIR-7889800

Sao Tome: Last three JDZ oil blocks withdrawn from auction - ANP chief

Sao Tome, April 7 (Lusa) - Sao Tome and Principe and Nigeria have withdrawn from auction the last three of nine oil exploration blocks in their Joint Development Zone (JDZ) due to lack of interest by potential bidders, the head of islands' National Petroleum Agency (ANP) said Friday.

ANP director Luís dos Prazeres told Lusa the bilateral decision was taken because JDZ blocks 7, 8 and 9 were located in "very deep waters" and would require great exploration costs.

"For the moment, the auction process of JDZ blocks is concluded", dos Prazeres said, adding, however, that the three remaining blocks could be looked at again "in six or seven years" after the start of operations in the six JDZ blocks already awarded.
Of the six blocks awarded in 2004 and 2005, the ANP director said production sharing contracts had yet to be signed for blocks 5 and six but that that process should be concluded "within two or three months".

Dos Prazeres, in his interview with Lusa, also said that Sao Tome could launch tenders for oil exploration in its Exclusive Economic Zone in the Gulf of Guinea by the middle of next year.

That process, he said, was delayed because of the need to "prepare a new legal framework", as current legislation, approved in 2000, was "no longer appropriate".
The government, he added, was already at work drafting new legislation for the EEZ, covering issues such as local content, customs duties and foreign exchange matters.

He said the legislative package could be approved by parliament by the end of this year and that "some activity could possibly take place in the EEZ in the middle of 2007".

Dos Prazeres also said that the STP government continued to "desire" the creation of a four-party Lusophone oil consortium with Portugal, Brazil and Angola to operate in Sao Tome's waters.

The consortium idea was first launched by President Fradique de Menezes during a visit to Brazil last year, but, according to dos Prazeres, progress has been stymied by past delays in the JDZ awards process.


And here is another report from Agence France-Pressein Today Online, based on the first Lusa story:

Business // Weekend, April 8, 2006

Nigeria and Sao Tome and Principe have withdrawn from auction the last three of nine offshore oil exploration blocks found in an area shared by both nations, due to a lack of interest by oil firms, a senior Sao Tome official said.

The head of the tiny island state's National Petroleum Agency, Luis dos Prazeres, blamed the lack of market interest in the three blocks on the fact that they are located in deep waters where it is more difficult and expensive to prospect for oil.

The three blocks will probably go up for auction again in six or seven years when exploration is already under way in the six other blocks in the two nation's Joint Development Zone (JDZ), he told the Lusa news agency.

"For now the auction process in the joint area is complete," he said.

Under the terms of a 2001 agreement that established the JDZ, Nigeria is entitled to 60 percent of all oil and gas revenues from the formerly disputed waters while Sao Tome, a former Portuguese colony, gets 40 percent.

Dos Prazeres said Sao Tome plans to launch tenders for offshore oil exploration in its Exclusive Economic Zone by the middle of next year after parliament approves new legislation regulating activity in the area.

The government is already at work on legislation covering environmental issues, customs duties and foreign exchange matters which could be approved by parliament by the end of this year, he added.

Huge oil deposits detected in the waters off Sao Tome since 1995 have stirred international interest but so far the tiny archipelago of less 200,000 people has yet to feel the results of an expected oil boom.

Some studies suggest the islands, which gained independence from Portugal in 1975, sit on between six and 11 billion barrels of crude oil.

In January a consortium comprising ChevronTexaco, Exxon-Mobil and Nigerian concern Dangote Equity Energy Resources began drilling the first well in the JDZ, situated some 200 kilometres (120 miles) south of the oil-rich Niger Delta.

.The well, being drilled in deep waters in Block One of the JDZ, is seen as a crucial first indicator of whether the area does contain large and potentially profitable oil and gas reserves.

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Posted at 8:53pm 4/7/06

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