The Nigerian government's top energy advisor, Dr. Edmund Daukoru, also promised production sharing contracts for the blocks will be signed "immediately" after the award of licenses for Blocks 2, 3, 4, 5 and 6.
NAN also reported that the blocks may hold "between 6 billion barrels to 12 billion barrels of crude" oil, an increase over earlier estimates of 4 billion that have been widely relied upon.
Daukoru did not say whether the PSC signings will include that of Block 1, the much-awaited Production Sharing Contract betwen the JDA and ExxonMobil, ChevronTexaco and Energy Equity Resources - reportedly held up as ExxonMobil's lawyers pore over a new "transparency" clause introduced into the contract talks after a related law was passed in the Sao Tome Parliament.
The timing of that signing may be tied to XOM's discussions with other companies, including ERHC, about its 25 percent preferential rights in two of the blocks now on offer. Meanwhile, the contractual issue of notifying XOM of the bid winners so that it can decide where to place its preferential rights is unresolved. The JDA failed to notify the company of the winners after the first round ended - but it was the winner. ERHC has a similar notification clause that was not abided by in the first round, but the issue became moot when the company failed to win any block awards. Both companies may have gotten other bidding concessions in place of the valuable notification rights, however.
Under the initial terms of the agreement, the company had 30 days after the awards announcement to select its blocks for exercise of the preferential rights. UpstreamOnline's Barry Morgan has reported the company is trying to "farm out" those rights, and has contacted ERHC regarding them.
Currently, since the awards were supposed to have been announced on Dec. 31, according to a speech Daukoru gave at the opening of the Nov. 15 licensing round, it has been unclear when those 30 days begin. Leaving the matter open-ended has frightened those who recall the six-month delay in announcing the winners of the first round, which was to include nine blocks but only awarded Block 1 to ExxonMobil, CVX and EEL.
Daukoru's statement came after a day of mounting criticism directed at the JDA by furious investors and even as Nigeria moved to take over producing oilfields leased by Royal Dutch Shell, ChevronTexaco and other firms that are currently generating $1.05 billion worth of oil a year at Tuesday's Nymex $45.80 closing price. In an update, the Dow Jones News Service reported that a Shell spokesman in London said that the company has asked Nigeria to "reconsider" that decision.
Here is the Guardian report, available at http://www.ngrguardiannews.com/:
JDZ to announce winners of oil blocks this month
NIGERIA-Sao Tome and Principle Joint Development Zone (JDZ) is to announce the successful companies that won the five blocks put on offer in December before the end of this month.
The Presidential Adviser on Petroleum and Energy, Dr. Edmund Daukoru, told the News Agency of Nigeria (NAN) on Monday in Abuja that the move would kick start the exploration of hydrocarbon resources in the zone.
"I believe that before the end of this month we will get the necessary high level approvals and we will announce the winners immediately", he said.
The News Agency of Nigeria (NAN) recalls that the JDZ promised to announce winners on December 31, 2004 after receiving 26 bids from 23 companies but that did not happen. The bidding round will fetch the JDA $433 million as signature bonus.
Daukoru said the Christmas and New Year holidays actually slow down activities at the JDZ.
He said the Joint Ministerial Council (JMC) of the JDZ was currently analysing the bids received aimed at ensuring accountability and transparency.
"We have to weigh the signature bonus benefits versus the competence and technological know-how of the bidding companies to be able to arrive at a fair decision," he said.
The presidential aide also said the JMC was looking at the potential of oil in each of the blocks before, which would soon be rounded-off.
Although, he said, Nigerian companies that participated in bidding round do not have deep-water experience, the JDZ would consider them seriously.
He said the move would further domicile local content in the upstream sector of the oil industry.
The NAN quoted him as saying that Production Sharing Contract (PSC) would be signed with the successful companies immediately [after] the licences were awarded.
NAN reports that studies revealed the presence of between 6 billion barrels to 12 billion barrels of crude at the zone.
The JDZ was established in February 2002 to explore and manage hydrocarbon and non-hydrocarbon resources in the zone on 60/40 basis in favour of Nigeria.
11 comments:
Joe, you should post links.
http://www.guardiannewsngr.com/business/article02
There was a link in the story. You had to read to the third or fourth graf.
I posted a direct link above and here it is again.
http://www.guardiannewsngr.com/business/article02
Joe - Maybe you lit a fire under someone's seat with your email to the Nigerian media and they got out of that seat and talked to Daukoru to see what was up. Thanks for posting that news. Nice summary at the end of the day and something to anticipate tomorrow.
I'd like to think that was the case. I've had a few dozen African journalists visit my home under the auspices of the US State Dept. and I think they are great people if their editors let them go. The important thing to do is to reach those editors. I think the Guardian was one of those newspapers, 3 of the 8, that did not bounce email sent to them. This was a very helpful story, in my view. I wonder about the PSC in Block 1, though.
I have noticed that many African journalists enjoy jumping all over a story and certainly aren't content to just post the basic details. They seem to enjoy digging and probing... and taking an occasional swipe at this one or that one when their questions don't get answered. If their editors give them a long enough leash, they seem to be able to hunt down a lot of good stuff. But I think the reporters are a little lax in confirming some details (double-checking) and getting background info to support their story, which is also up to the editor to check those things. How many times have we seen errors in recent stories which could/should easily have been spotted?
Too many times, for sure. i may update a story as many as 15 times before I am fully satisfied with it; the first post is often riddled with typos and the like. But I try very hard to make sure what I state as fact is fact.
Sorry if this question is rather pedestrian but why does ERCH even have to submit a bid when they already have validated rights. Can't they simply declare their shares of the blocks?
ERHC does indeed get their share in each of the remaining blocks...but it is just a percentage in each block. If they win something through awards, then their percentage in each block increases. They get more of the pie. TO summarize, there are six pies being divided. ERHC has a few slices in each of those six pies. However, the baker (JDA/JMC) decides what to do with the rest of the slices for each of those pies. If ERHC gets additional slices, then they can wind up owning more than half of the pie, and half of that half is free.
My question for you is, does that reduce the amount we ought to bid for a block where we have prefential rights in order to win? Or has it reduced our bids?
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