JDZ Issues 2 Press Releases on Payment And PSC In Block 1

The Nigeria-Sao Tome and Principe Joint Development Authority, which rarely communicates more than once a month, has issued two press releases today, indicating that the Joint Ministerial Council is hard at work resolving issues and preparing the way for awards. Both releases were dated Monday.

The main release states that the companies have finally paid the bonus.

The slow payments have been a source of anger and concern for Sao Tome and Principe, which was forced to borrow money from Nigeria to keep going, and will watch most of the first dollars it will earn from petroleum - some $49 million - fly out the window for debt repayment, debt service, and other pre-ordained commitments.

For ERHC Energy, Inc., investors, however, the releases are great news as they signal that Sao Tome is not an obstacle to awards and that a Production Sharing Contract modeled on that in Block 1 may be ready for signature very shortly after the awards in Round 2 are announced. At this pace, that could come before the end of the day.

Here is the first, on the long-awaited payment of $123 million as a signature bonus from Block 1 winners ChevronTexaco, the operator, and minority stakeholders ExxonMobil, Energy Equity Resources and, presumably, its new partner, Afren:

STATEMENT ON PAYMENT OF REVENUES

Following the signing of the first Production Sharing Contract (PSC) for Block One of the Nigeria- Sao Tome and Principe JDZ, the consortium below:

ChevronTexaco - 51% (Operator)
ExxonMobil - 40%
Dangote Energy Equity Resources - 9%

have effected payments of the Signature Bonus of $123 million USD only.

This notice is in line with Clause 30, specifically 30.1(a) on Transparency in the Production Sharing Contract (PSC) signed between the JDA and the three companies. It mandates the JDA to report on its website within (10) days of receipt of the report of payment from CONTRACTOR parties.
It is also on conformity with the provisions of the Abuja Declaration on
Transparency signed in Abuja in June 2004.
Nigeria-Sao Tome and Principe
Joint Development Authority
Abuja
25th April 2005

Here is the second one, which deals with the conteroversial "transparency" clause that requires all payments to the Joint Development Authority and both nations to be made out in the open where everyone can see them. ExxonMobil, which has been involved in a huge bribery scandal in neighborind oil-rich Equatorial Guinea, wassaid to have balked at this clause. ExxonMobil eventually walked away from two 25 percent preferential rights in the Joint Development Zone Round 2, but has reserved the same rights for later rounds.

PRODUCTION SHARING CONTRACT (PSC) FOR BLOCK ONE –
TRANSPARENCY CLAUSE

The Production Sharing Contract (PSC) for Block One which was signed between the Nigeria-Sao Tome and Principe Joint Development Authority (JDA) on 1st February 2005 in Sao Tome and whose effective date was signed in Abuja, Nigeria on 22nd March, 2005 between the JDA and the consortium below:

ChevronTexaco - 51%
ExxonMobil - 40%
Dangote Energy Equity Resources - 9%

have in line with the Abuja Declaration on Transparency and Accountability adopted a clause on Transparency to guide the conduct of Exploration and Production activities in the JDZ.

Specifically, clause 30.1(a) of the PSC stipulates that: Each CONTRACTOR Party shall report to the JDA the amount of signature bonus it paid to the JDA under Clause 2.1 and the JDA shall publish said reports on its website within ten (10) working days of receipt of such report. The JDA shall include such amount in the amount of aggregated Signature Bonus payments it receives from all sources in respect of the JDZ during the relevant reporting period and then publish such aggregate amount on its website.

Nigeria-Sao Tome and Principe
Joint Development Authority
Abuja
25th April 2005