Awards Friday, Nigeria's Daily Independent Says; Obasano Visit Confirmed; Lusa Says Nigeria Uses Block 1 Funds As Leverage; Devon Funds Lagos Project

The well-regarded Daily Independent tells readers in Thursday morning's editions there are "strong indications" the Nigeria-Sao Tome and Principe Joint Development authority will announce the winners of Blocks 2, 3, 4, 5 and 6 on Friday, ending a long wait for ERHC Energy investors who have rights to substantial options in all of the offered blocks and is partnered with major American firms in three of them.

The news is likely to ignite a rally in the stock, which has fallen over the past two weeks from a high of $0.89 to a low of $0.60, and closed Wednesday at $0.70. The awards had been delayed repeatedly after they were supposed to hhave been announced on Dec. 31, 2004.

The paper quoted an unnamed JDA offical as saying President Fradique de Menezes had signed off on the awards after 12 days of non-stop, gut-wrenching political turmoil that often seemed ready to derail the entire process.

This story has some original material, including the information that President de Menezes has signed the diocument, and an original quote. There are none of the obvious mistakes that usually accompany the nuttier Nigerian newspaper reports. And it is consistent with reports in four other publications Wednesday as well as the statements of the Secretary of JDA we reported yesterday.

JDZ oil block winners emerge on Friday
by Charles Okonji
Senior Business Correspondent

(With news agency report)

ABUJA -- There are strong indications that the Joint Development Authority (JDA), the body vested with the responsibility of overseeing the Nigeria-Sao Tome and Principe Joint Development Zone (JDZ), will on Friday announce the winners of five oil blocks put on offer last November.

An official of the Department of Petroleum Resources that disclosed this said: “The winners will be announced before the end of the week. ExxonMobil has exercised its 40 per cent option right on Block One and reserve. It has 25 per cent option on two blocks for the next licensing round.”

Winners, he said, had been chosen based on competence and wherewithal to operate in the deep offshore waters, adding that the Joint Ministerial Council (JMC) of the JDA met in April and decided the winners that had been approved by President Olusegun Obasanjo and his Sao Tome and Principe counterpart, Fradique Des Menezes.

Exxon-Mobil reserved its 25 per cent options on two blocks among the five on offer in the 2004 bid round because it could not be given the operatorship of the blocks in line with its desire.

But a Portuguese-language Lusa news agency report suggests there may still be problems ahead as Nigeria uses its custody of Sao Tome's $49 million share of the Block 1 signature bonus fee - at least according to Lusa, which cites the Nigerian Ambassador to Sao Tome as its source - to push for a conclusion to the second round of licensing.

We're unsure why the Nigerian Ambassador would have spelled out the terms of the impasse in such stark language for an international audience, and we therefore find it suspect.

In our opinion, the story is an effort to further divide Sao Tome and Nigeria and complicate the awards process. Portugal's national oil company, of course, has been trying to horn in on the licensing process but came too late to the party to offer a bid. Now Lusa can keep the fracas going in Sao Tome with one-sided reporting and hope to fare better against ERHC in the Sao Tome EEZ round.

However, the story may offer some insight into why the dispute was apparently resolved, as the Independent says.

Here's a "synthesis" of the Lusa report from Homeport, with his homemade (note his use of "Hard Ball" instead of "Hardball") headline:

Abuja Playing Hard Ball:

FYI, Portuguese Lusa agency carrying story ex-Sao Tome with Nigerian ambassador saying Wednesday that Block One signing bonus funds blocked due to STP inaction. And that political gridlock in islands could jeopardize bilateral awards process.

Ambassador Saidu Pindar told Sao Tome news conference that "the distribution and use of the funds" from first round award of B-1 "can't proceed because STP authorities have not yet signed a resolution agreed between the two states."

Pindar, Lusa added, also said: "We are waiting on STP's authorities to distribute the money," $123-million the ambassador said was in Nigeria´s Hallmarb (sic) Bank.

By treaty STP will get 40% of the signature bonus.

Agency cites Ambassador Pindar as lamenting the recent declarations of "the two STP parties" and acknowledging that such could "compromise the process."

Lusa does not make clear what "resolution" is yet to be signed nor does it specify whether the "two parties" are the two sides in the debate in Sao Tome or the two government parties - MLSTP-PSD and ADI - which have been most critical of the awards dynamic underway and President de Menezes' handling of the affair.

No reference to possibility of Obasanjo visit.

Story seeable at www.lusa.pt in Portuguese service. Imagine English LusaNews will carry later today.


By Homeport, at 2:30 AM

And now, here's an update from Homeport, in which Lusa's RDP Radio says Obasanjo is going to Sao Tome tomorrow:

Hardball-2nd Inning: Obasanjo Enters the Game

FYI, Portugal´s RDP-Africa radio reporting this morn ex-STP that it "has learned" Nigerian President Obasanjo will be in STP Friday.

It gives no source for the info.

RDP-Africa also updates Ambassador Pindar´s comments at Sao Tome news conference yesterday:

-- islands' two ruling parties - MLSTP/PSD and ADI - place bilateral "relations and cooperation" in jeopardy by hobbling advance of awards process; and

-- denies comment he attributes to President Menezes that STP has no decision-making power in framework of Joint Ministerial Council.

Looks to me as if the clock is finally ticking COUNTDOWN.

Thanks for correcting my spelling, Joe: I've played soccer all my life, rather than any form of baseball.

Cheers,

By Homeport, at 5:41 AM

And, finally, also from Homeport, confirmation that Obasanjo is going to Sao Tome:

FYI, LusaNews carrying confirmation Obasanjo expected in STP tomorrow. Cites unidentifies Menezes' aide.

-- www.lusa.pt --

Bests,

By Homeport, at 9:49 AM

In other news released today from Nigeria, our partner in Blocks 2 and 3, Devon Energy, is spreading the wealth around by aiding schools and education in Nigerian communities, the Financial Standard reports Thursday:

Ocean Energy spends N53m on community development projects
by Samuel Ibiyemi

LAGOS -- Ocean Energy Nigeria Limited, a subsidiary of Devon Energy Corporation of the United States of America, has spent N53 million on the building and installation of educational facilities in three primary and secondary institutions in Lagos State as part of its community development programme for last year.

A breakdown showed that the company invested N25 million on four educational facilities at Fagba Junior Grammar School; N20 million on provision of seven education facilities at Archbishop Taylor Memorial Nursery and Primary School; and N7.5 million on rehabilitation and supply of infrastructure at Methodist Boys High School, all in Lagos State. Some of items financed at Fagba include two blocks of five classrooms, a multi-purpose laboratory and a staff room.

The donation made by the exploration firm is expected to improve condition of learning in the affected institutions. It would also encourage existing oil producing firms to improve on their community development strategies.

Mr. Raymond Marchand, managing director, Ocean Energy Nigeria Limited said at the handing-over of community development projects executed at Fagba in collaboration with the Nigerian National Petroleum Corporation (NNPC) last week, that the projects were financed to assure government and communities that the company was in Nigeria for a long haul.

"It is our interest globally to improve conditions of living in communities where we operate", he said.

Governor Bola Tinubu of Lagos State said at the handing over ceremony that executives of the state are pleased with the performance of Ocean Energy in terms of making huge investment on community development projects, which he noted are vital for building manpower capacity, within its two years of exploration activities in the country.

"This investment is the right thing to do by any corporation because education is the only right investment that would tackle poverty, which is a menace in Africa", he said, enjoining other oil firms to emulate the gesture. He said the contributions of the private sector, especially in Lagos was very crucial because of the state’s peculiar socio-economic status.

"Since we cannot catch up with all the needs of the population as a result of the high growth rate, the contribution of private sector players would always be appreciated by the state government", he said.

It appears to us that Devon and Ocean Energy, which it acquired last year, plan to build a productive and propserous relationship with Nigerian communities.