ERHC Energy Inc. of Houston is a leading candidate among bidders for five blocks on offer and is said to have won Block 4 from Anadarko Petroleum of Oklahoma City with a superior technical bid from its partner, Noble Energy, which has committed to drilling three wells in one year compared to Anadarko's promise to sink one well in three years. Anadarko also wanted to stagger payment of its proposed $90 million bonus fee, while the ERHC/Noble Energy partnership would pay its $57 million bid in one tranche, according to industry news reports.
Other Sao Tome officials are in Washington now pleading with the International Monetary Fund to relieve their debt burden, when the block awards would confer hundreds of millions of dollars on the tiny island nation of 150,000 people.
Immediately below is the English-language article from the Lusa press agency, and I have provided a partial translation in boldface of the story from Tela Non below that:
02-05-2005
23:54:00.
Fonte LUSA.
Notícia SIR-6966876
Temas:
Sao Tome: Oil officials to discuss delay in release of results for block bids
Sao Tome, May 2 (Lusa) - Oil officials in Sao Tome and Principe meet this week to discuss hold ups in the release of results to the licensing round for five offshore blocks in the joint exploration area operated with Nigeria, an official said Monday.
Natural Resources Minister Arlindo de Carvalho said Sao Tome's National Petroleum Council would be meeting to discuss bilateral ministerial meetings last week in Abuja on the delayed announcement on which companies will be chosen to operate Blocks 2, 3, 4, 5 and 6 - bids for which were opened in November 2004.
Block 1 has already been awarded to ChevronTexaco, which is due to pay a USD 123 million signature bonus for its successful bid.
Carvalho, who headed the Sao Tome delegation at the recent oil talks in Nigeria, denied any irregularities in the process of adjudicating on the award of rights to the five offshore blocks.
Portuguese state radio RDP Africa reported last week that delays in announcing the results of the latest licensing round were the result of attempts to disqualify some bids in favor of firms with Sao Tomean leaders as shareholders.
Sao Tome and Abuja set up their overlap Gulf of Guinea exploration zone in 2001, splitting their future oil receipts 60/40 in Nigeria's favor.
Meanwhile, a new story, this one from Tela Non, an infrequently updated but very serious Website filled with Sao Tome political news, published a new story in Portuguese on the same controvery:
Leilão de blocos petrolíferos causa polémica
Auction of blocks causes controvery
by Valdimir António
SAO TOME (Tela Non) -- Uma notícia veiculada pela comunicação social portuguesa dando conta de conflitos, jogos de interesses e pouca transparência no 2º leilão de blocos petrolíferos da zona de exploração conjunta nigeriano-são-tomense, está a causar polémica no arquipélago.
Segundo a notícia posta a circular pela RDP-África, a reunião do conselho ministerial conjunto nigeriano-são-tomense (JMC, na sigla em inglês) da última semana, aprovou decisões relativas ao 2º leilão de blocos petrolíferos e adjudicou a participação de exploração a empresas sem qualificação técnica requerida em detrimento de companhias com melhores referências e maiores ofertas de bónus de assinatura.
A notícia avançava ainda que alguns membros do conselho nacional do petróleo e do conselho ministerial conjunto, são ao mesmo tempo sócios de companhias petrolíferas que poderiam tentar influenciar o resultado do leilão em proveito de suas empresas, numa clara alusão a Mateus Meira Rita, que é sócio da ERHC e Director de Gabinete do presidente Fradique de Menezes.
The news story advanced the idea that some members of the National Council on Petroleum and of the Joint Ministerial Council were at the same time associates of the oil companies that could try to influence the results of the auction to provide for those businesses - a clear allusion to Mateus Meira Rita, who is a business associate of ERHC and a director of the Cabinet of President Fradique de Menezes.
Porém, o governo veio rapidamente desmentir tal notícia. Segundo o ministro dos Recursos Naturais e Meio Ambiente (MRNMA) são-tomense, Arlindo Carvalho, “a decisão de atribuição de qualquer bloco petrolífero não depende da JMC, mas de autoridades superiores”.
Thus, the government sought to rapidly contradict the news story. According to the minister of the Sao Tome Matural Resources and Environment (MRNA) Agency, Arlindo Carvalho, "the decision attributed to any oil blocks did not depend on the Joint Ministerial Council but on their superior authorities."
Ainda segundo o ministro, “porque a reunião de Abuja não foi consensual, o conselho nacional do petróleo deveria reunir de emergência na passada sexta-feira para analisar a questão”, o que não aconteceu por ausência de alguns dos seus membros.
Said the vice president, "because the meeting in Abuja did not have consensus, the national council on petroleum should have met in emergency session on this past Friday to analyze the question" of whatever happened but could not due to the absence of six members.
Por causa desta polémica a Comissão dos Assuntos Petrolíferos da Assembleia Nacional (CAP) convocou de emergência o MRNMA ao Parlamento, para prestar esclarecimentos. Após mais de duas horas de audição, os deputados concluíram que o processo “está a ser viciado”.
Because of the controversy the Committee on Petroleum Affairs of the National Assembly (CAP) convened in an emergency session with the MRNMA
to the Parliament to provide clarification. After more than two hours of hearings, the deputies concluded that the process "was flawed."
“Está demonstrado que há um vício na forma porque há representantes de São Tomé e Príncipe que são accionistas de empresas, isto a partida lança um clima de alguma suspeição, e vamos pedir ao governo que reveja todas as negociações”, garantiu Carlos Neves, Presidente da CAP e Vice-Presidente do parlamento.
"That demonstrated that there was a flaw in the format because representatives of Sao Tome and Principe were shareholders of the company, and this departure from the norm lauched a climate of suspicion, and we are going to ask the government to review all the negotiations," vowed Carlos Naves, president of CAP and Vice-President of Parliament.
Nos próximos dias, a comissão especializada da Assembleia Nacional para os assuntos petrolíferos vai reunir-se com os representantes de São Tomé e Príncipe na Autoridade Conjunta (JDA, na sigla em inglês) e com os responsáveis da Agência Nacional do Petróleo (ANP) são-tomense, para depois assumir uma posição definitiva.
In the next few days, a special committee of the National Assembly is going to meet with the representatives of Sao Tome and Principe on the Joint Authority (or JDA, as it is known in English) and the Sao Tomese members of the National Petroleum Agency in order to lay down and assume a definitivee position.
I will try to translate the remaining two paragraphs as time permits later today, but they do not contain additional information.
The meaning of these articles for investors is unclear. It is possible that reviews of the decision could be taken on by Sao Tome figures who have tried to block EHC's rights in Parliament earlier, but were unusccessful.
Without being privy to the political makeup of the National Petroleum Council, however, I can only guess that its memberships reflects the same ratio of partisan division that exists in Parliament and now favors the de Menezes government.
That in turn would mean that reviews could be defeated or that the proposals from the Abuja meeting could be endorsed by the petroleum council. The "absence" of six members of the petroleum commission that failed to meet could well have been strategic.
Under the parliamentary system, the Vice President, Carlos Neves, may have limited authority by comparison to that of the Prime Minister, who is currently in the United States seeking debt relief from the WEorld Bank and the International Monetary Fund.
Even if the awards could be held up in Sao Tome, it also may be that the opposition would not want them to be delayed any longer due to the pressing financial problems that signature bonus fees would alleviate.
The awards that were supposed to occur last year also took place against a backdrop of a presidential visit to Washington, and Raging Bull posters also expressed their hope then that awards would be announced there or just before leaving. That didn't happen, though.
Nigerian President Olusegun Obasanjo goes to Washington tomorrow and will have a press availability with President George W. Bush Thursday, but it is not known whether reporters will raise the question of the awards' delay. That will probably depend on how much interest they think the public has in the issue. We think it is better to keep the pressure up via phone calls and messages to elected officials and the President (as we recommended in an earlier post) than to do nothing.
7 comments:
This is dis-heartenining. No wonder African business is still 3rd world.
Anonymous, you've been just victimized by the typical Joe Blog distortion.
To help us understand the ambiguities of decision making in STP, we shouldn't lose sight of the fact that the government is not "Menezes' cabinet," as you erroneously label it, Joe.
The islands have a frequently gridlocked, bicephalous power system with prerogatives split between the parliamentary-based government and the presidency. The cabinet is led by the MLSTP party, archrivals to de Menezes.
And every side wants a piece of the action.
Cheers,
P.S. As to the Tela Non piece in Portuguese, it describes Menezes' Meira Rita as an ERHC "partner."
And says that "because the Abuja meeting was not consensual, (STP's) national petroleum council should have met in an emergency session last Friday, but didn't due to the absence of some members."
The daily loss on oil revenue taxes for Sao Tome Principe is $ 4 millions.
But is seems they can afford to negotiate forever and at the same time beg for help from the IMF.
Each one of the 5 prime oil blocks on offer in the 2004 JDC licensing round will eventually produce at least 100'000 Barrels of oil per day.
This is 500'000 barrels combined. At the current oil price of $50 per barrel and deducting production cost of $10 per barrel leaves $40 per barrel.
The tax rate in the JDZ is 50 percent. 500'000 times $20 makes $10 million tax per day.
40 percent of this would be for Sao Tome Principe. That's $ 4 million each day.
4 times 365 makes $1.46 billions tax income not cashed in per year for STP.
I can only hope the IMF will tell them to speed up!
If you don't like Joe's slant on news don't come here and read it. I can guess exactly which RB posters are leaving these anonymous comments, and let me tell ya - your opinions are no more valid than Joe's. It just drives you crazy that someone else has an opinion that often differs from yours, and that you can't affect it in any way
These two countries are making a serious miscalculation by allowing this award process to drag on like it has.
What company would bother to waste valuable time and resources bidding on blocks in the respective EEZ's when the whole JDZ award process has been such a circus?
Sao Tome and Nigeria are only hurting themselves. I am sure the companies involved in this process are absolutely besides themselves with anger as deadline after deadline passes with no conclusion.
What if they decide to do a rebid and the price of oil drops to $35 a barrel? Then the bids they see now will not be their again. And either will the interest by respectable oil companies.
They better get this thing done soon or both EEZ's and the JDZ's will be harmed permanently. I think Nigeria is already seeing that with their own EEZ. Nobody is interested.
Gee I wonder why?
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