Contradicting Another, Newspaper Says Awards May Come Next Week

Citing the "anxiety" stirred among oil companies by delays in the award of block concessions in the Nigeria-Sao Tome and Principe Joint Development Zone, This Day Online said Monday that awards "may" come "next week."

If true, it would be an enormous relief to investors - but as it is, it merely adds a new layer of doubt and confusion to the awards process. That may even have been its purpose.

This Day is a publication whose oil writer, Mike Oduniyi, is thought to be close to the Nigerian company Conoil. His article, dated March 21, contradicted a report dated March 22 by The Punch of Nigeria, which also came out Monday, March 21. See the post preceding this one for that article.

It raised a simple question: How could the This Day report, if it was deliberate, contradict The Punch report a day ahead of its appearance?

That problem can be resolved by the fact that both reports actually came out on Monday, when they were first seen by ERHC On The Move.

We saw the piece from The Punch in the late afternoon, and the piece from This Day Online late Monday night. The latter article was tucked away in an area called "Companies and Markets" that could be linked to only from the main Business page, which is not frequently updated.

The Punch post-dated its account of a conversation with Samuel Obiora, a deputy to JDA chief Carlos Gomes, who told The Punch at an oil conference in Abuja Monday that awards would be delayed until April 19.

This Day Online does not time-date its reports, but no alert investor had spotted it earlier than March 22. Oduniyi's articles do not have a strong record of accuracy, while the writer of The Punch report has no track record in our experience.

The report in This Day Online also refers to a statement made by the JDA "at the weekend" and may therefore be out of date.

Oduniyi is obviously wrong when he says ERHC Energy has exercised "one" of its rights in the five blocks, when in fact it exercised rights in all five blocks ahead of ExxonMobil, which gets the final two choices.

As in the past, as awards grow near both rumors and facts fly wildly about, leaving investors deeply uneasy about the future. Based on The Punch article, ERHC On The Move entered a substantial sell order early Tuesday morning. It may yet have to be cancelled.

The This Day report also says ExxonMobil was given a "mandatory" 45-day period to choose in which two of the five blocks currently offered it would exercise its rights to 25 percent allotments. No other reporting has suggested a 45-day period.

In fact, ExxonMobil was given no deadline at all in the original announcement of the terms of this round, published on the Nigeria-Sao Tome Joint Development Zone Website on February 1 at http://www.nigeriasaotomejda.com, where an official press release states:

3. As soon as Exxon Mobil exercises its options, the JMC will be convened to approve the final structure of the award of the blocks put on offer in the 2004 JDZ Licensing Round. This is expected to be done before the end of the month.

The statement merely said ExxonMobil has to choose before awards can go forward. No deadline was given. The deadlines were a subsequent invention and have not been stated in an official document even though JDA spokesman Sam Dimka offered them via Raging Bull ERHE message board poster orangeandwhite0 over the past several months.

Thus, there really is no written hard-and-fast deadline, 30-day, 45-day or otherwise, provided in any official statement of the JDA.

Here is the This Day Online report by writer Mike Oduniyi:

JDZ Oil Blocks: Winners May Emerge Next Week
by Mike Oduniyi, 03.21.2005

ABUJA -- Winners of the five oil blocks in the Joint Development Zone (JDZ) of the Gulf of Guinea, put on offer last November, may emerge next week.

This followed indications that US oil major, ExxonMobil, will exercise its pre-emptive rights on any two blocks of its choice before the end of this week.

Officials of the Joint Development Authority (JDA), the body managing hydrocarbon resources within the zone on behalf of Nigeria-Sao Tome and Principe, said at the weekend that once ExxonMobil exercised its rights, the Joint Ministerial Council (JMC) will call a meeting to decide on the winners.

The mandatory 45 days period allowed for ExxonMobil to exercise its 25 percent rights on any two blocks among the five blocks on offer also expires this week.

The JDA has the right to go ahead with the award if ExxonMobil fails to exercise its right. But officials of the US firm told THISDAY that the company would surely meet the deadline.

It was gathered that another company, Environmental Remediation Holding Company (ERHC) in which indigenous firm, Chrome Energy, has a major stake, had already exercised its own preferential rights to one of the blocks and accepted by the JDA.

Anxiety had mounted, especially among Nigerian indigenous oil companies that bidded for the oil blocks named 02, 03, 04, 05 and 06, over the delay in the award, which, according JDA, should have been announced mid-January.

ExxonMobil has the right to first exercise rights in three of the nine blocks in the zone. The oil firm exercised its rights by claiming 40 percent interest in Block 01, awarded last year by the JDA.

Although ExxonMobil sources refused to disclose the block of choice, it is already widely speculated that the company would end up exercising its 25 percent interest in the much sought after Block 04, leaving indigenous oil company, Conoil, to battle for the remaining 75 percent shares in the block, with five other companies.

Nigeria and Sao Tome last month, received $123 million for awarding Block 01 to ChevronTexaco (operator), ExxonMobil and Dangote Energy Equity Resources.
Conoil led the pack of local firms seeking to grab one or two of the licenses, offering to pay a signature bonus of $150 million (N20 billion) for Block 04.

Also in the race for the Block 04 with, seen as the most prolific of the acreages, is Environmental Remediation Holding Corporation (ERHC) in which another indigenous company Chrome Energy holds 50 percent stake, which will exercise a preferential right in the block.

Other indigenous oil companies bidding for the same block are Anardako Petroleum and Hercule Oil/Centurion Energy which offered $90 million and $81 million, respectively, as well as two US firms, ECL International, which offered a signature bonus of $175million and Vintage Oil and Gas, offering $135 million.

A total of 26 oil companies submitted bids for the five oil blocks in the JDZ as at the close of the 2004 Licensing Round.

Details of the applications showed that the companies offered various amounts totaling more than $1.8 billion as signature bonuses for the blocks. Nigeria and Sao Tome will share the proceeds from the licensing on 60:40 ratio.

For Blocks 03, 05 and 06, had Energy Equity Resources, I.C.C.-O.E.O.C. consortium and Filtim Huzod Oil and Gas Limited offering $37 million, $41 million and $45 million respectively.

Special Adviser to the President on Petroleum and Energy matters, Dr. Edmund Daukoru had actually cautioned at the opening of the bids last December that signature bonus alone might not confer automatic victory to any of the biding companies.