Upstream Online: ERHC Set For JDZ Blocks 2 And 3, As XOM Fights ERHC/Noble For Piece of Block 4; JDA Press Release Leaked; Is EER In Trouble?

UpstreamOnline's Barry Morgan has revealed tonight that ExxonMobil's months-long effort to slow awards is aimed at obtaining an operatorship with Anadarko Petroleum in Block 4 of the Joint Development Zone that Nigeria and Sao Tome and Principe are reluctant to give the company.

The veteran oil industry journalist also says that two blocks of the JDZ have already been decided for ERHC Energy and its partners Devon Energy and Pioneer Natural Resources. The trio offered bids in Blocks 2 and 3.

In Block 4, Morgan says, ExxonMobil has tried to wrest operatorship of the block away from the favored combination of ERHC and Noble Energy, which has promised to fast-track three wells in its first year of operation. Anadarko has only promised to dig one well over the next three years, and ExxonMobil never bid on any of the five blocks on offer, where it is entitled to exercise two 25 percent preferential options in any of the five. The choices can also be traded in for participation in Sao Tome's Exclusive Economic Zone, where licensing is expected to begin late this year.

In other news, a JDA spokesperson has leaked a press release to two Raging Bull posters who have not yet disclosed it to other investors, setting the stage for a possible insider information violation of Federal securities laws.

Here is their description of the press release's contents:

Joe we got a hold of the JDA press release from Sam D, prior to its appearance on the JDA website.

It basically says EXXON requested more time and materials and they were provided on March 9th.

There is a 30day period for evaluation and for them to exercise and expect to be finalized April 9th latest and the JMC will immediately convene after for awards.

Here is the Barry Morgan article of this evening:

Tension on the rise off West Africa
00:05 GMT

Tensions mounted among suitors vying for a slice of the Joint Development Zone in the Gulf of Guinea, writes Barry Morgan.

The Abuja-based Joint Development Authority administered by Nigeria and Sao Tome is keen to award blocks 2, 3, 4, 5 and 6, but has been delayed by a last-ditch attempt by ExxonMobil to secure a block in partnership with Anadarko Petroleum.

The supermajor now has until 9 April to decide whether to take up its 25% priority equity in Block 4 or bail out entirely. ExxonMobil had wanted an operatorship but knows it cannot easily achieve this as it did not even bid.

For its part, Anadarko may be prepared to farm in to ExxonMobil's Block 4 if it is guaranteed an operatorship, which Nigeria is loath to give.

The JDA already has a fast-track commitment from Noble Energy to sink three wells back-to-back and that is the kind of action Nigeria wants.

Blocks 2 & 3 are said to have been decided in favour of priority rights holder ERHC Energy and its US partners Pioneer Natural Resources and Devon Energy, leaving Block 4 as the only other key licence undecided.

A second article, this one by oil writer Bassey Udo in Nigeria's Daily Independent, reiterates the information:

JMC awaits ExxonMobil on JDZ acreage
by Bassey Udo, Energy Editor


ABUJA -- The Joint Ministerial Council (JMC) of the Nigeria-Sao Tome and Principe Joint Development Zone (JDZ) is still awaiting ExxonMobil decision to exercise its rights in the five oil blocs put on offer in the 2004 licensing round.

The American oil firm, by virtue of its operating in the region prior to the 2001 treaty creating the JDZ, has 40 percent rights in one of the five oil blocs and 25 percent each in two others.

Last month, the JDA formally notified the company to move within 30 days to exercise its preferential rights to pave the way for the final appraisal of the bids and announcement of the result.

Following its requests for further information on the 26 bids harvested from 22 prospective investors that participated in the bids exercise, its management met two weeks ago with the JDA to resolve outstanding issues to assist its final decision.

Though a source close to the company last week expressed high optimism that the company was interested in exercising its rights, particularly in Blocs 2 and 4, he said a review of the agreements was on to report to the JDA before the April 8 deadline.

But, Thursday the JDA frowned at recent reports that the 30 days deadline had been extended, pointing out that though all relevant materials and information relating to the transaction were made available to the company on March 9, it was currently handling settlement of third party interest agreements reached with all the parties, adding that as soon as ExxonMobil exercises its options, the JMC will convene to approve the awards.

ExxonMobil is already operating in the premier oil Bloc-1 in the zone through its subsidiary, Esso Exploration and Production Nigeria-São Tomé "One" Limited, in partnership with ChevronTexaco JDZ Limited, the operator of the concession, and Dangote Energy Equity Resources (DEER) Limited, a Joint Venture between the Dangote Group of Nigeria and Energy Equity Resources of Norway.

Meanwhile, ERHC On The Move has learned from a source close to Energy Equity Resources that the firm, which has sold a portion of its rights in Block 1 to Dangote Energy, a Nigerian firm, may have difficulty in meeting substantial financial obligations in an unrelated offshore project.

It is unclear whether the apparent change of heart by ExxonMobil in deciding to pursue active participation in Blocks 2 through 5 is related to a reluctance to pursue the Block 1 project with an ailing partner, or if financial issues may be playing a part in slowing the payment by the partners of $123 million to the Nigeria-Sao Tome and Principe Joint Development Authority for rights to that block, which was won by ChevronTexaco (51 percent), ExxonMobil (40 percent) and Energy Equity Resources (9 percent), now aligned with Aliko Dangote's Dangote group.

Nigeria's This Day Online recently linked that late payment to the delay in anouncing awards.