Sao Tome Petroleum Council Approves Block Awards

In the first clear sign that the clouds have lifted over the long-delayed Nigeria-Sao Tome and Principe Joint Development Zone block awards, the Sao Tome National Petroleum Council has issued a finding that the proposed awards of blocks to ERHC Energy and its partners "at no moment injures the interests of Sao Tomé and Príncipe," even if some procedural irregularities appeared amid the awards process, and President Fradique de Menezes has declared he is ready to assume the role in which he would "monetize the process," i.e., sign the awards document delivered to him on May 6. and leave the NPC's leadership to others.

The powers pf the NPC (the Petroleum Oversight Commission in the draft law) are spelled out in the final part of this post. We have asked Gerhard Seibert for his comments on the matter, as well, and will report them when we receive a response.

Thus, as best we can determine, the final barrier to the awards process has apparently been lifted, allowing them to go forward as early as Sunday.

Once again, we are especially grateful to Homeport for having taken the time to reword the essence of the Portuguese-language story into English on this outcome from Lusa, the news agency that serves the islands and the Portuguese-speaking world.

Here is the "synthesis" and the original story from Homeport:

The National Petroleum Council spokesman, Ovidio Pequeno, told a Sao Tome news conference Saturday that there were "procedural insufficiences" in the JDZ block awards process, but nothing that violated STP's legal framework.

"The process at no time damaged STP´s interests", Pequeno, who also serves as Foreign Minsiter, said, according to a Lusa news agency dispatch.

The news conference was held to report on the meeting Friday of the oil council.

Also at a news conference Saturday (not sure if the same one), President Fradique de Menezes announced he was stepping down as chairman of the national oil council.

De Menezes said the head of state should keep his distance from the negotiations to avoid confusion.

He said he would "cease presiding" over the council meetings and "move solely to a supervisory role", according to the Lusa dispatch.

(It may be read at www.lusa.pt in the reserved service.)

Cheers,

Homeport, at 11:51 AM

And here is the Portuguese-language story Homeport characterized above, which I have edited from its machine translation:

Sao Tomé and Príncipe: President resigns from the National Pteroleum Council

Sao Tomé, 14 May (Lusa) -- The Sao Tome Head of State, Fradique de Menezes, today announced his resignation from the chairmanship of National National Petroleum Council of Tomé and Príncipe, responding to accusations of irregularities in the adjudication of oil blocks.

Fradique de Menezes made the announcement that rocked the meeting of the National Petroleum Council that he presided over Friday, following alleged irregularities noted in the process that aims at auctioning oil blocks in the Joint Development Zone with Nigéria.

The "self-removal" of Fradique de Menezes comes five days after the Movement for the Liberation of Sao Tomé and Príncipe and the Social Democratic Party (MLSTP-PSD), which are in the power, accused the President of violating the "frame" of regulations concerning oil to benefit himself.

In his declaration to the press, Fradique de Menezes underlined that "the President of the Republic must be moved away from these negotiations to prevent confusion," and added that "leave presiding over the meetings of the National Petroleum Council to others (...) and only pass on the monetization of the process."

Beyond the MLSTP-PSD, that supports the government of prime minister Damião Vaz de Almeida and is also the main party of the opposition, the Party of Democratic Unity (PCD) said the oil negotiations with Nigéria were "wildly disorganized."

The denunciation of irregularities in the adjudication of oil blocks became public in the capital of Sao Tomé through a report by the Portuguese-language radio network RDP-Africa of alleged favoritism regarding the oil, in which some Sao Tome leaders are shareholders, including figures close to the President of the Republic, Fradique de Menezes.

On the other hand, the spokesman of the National Petroleum Council, Ovidio Pequeno, declared the existence of an "insufficiency of procedure" in the process of auctioning blocks, but he rejected the allegation that any laws were broken.

Pequeno underscored that "The process at no moment injures the interests of Tomé and Príncipe." He also is the minister of the Foreign Affairs and Communities.

Denunciations of irregularities appeared several days after the last meeting in Abuja, the Nigerian capital, of the Joint Ministerial Council between Are Tomé and Príncipe and Nigéria, relative to the various bids for the five blocks offered in the auction.

A note on my translation, which has generated some dissent on Raging Bull: The word "monetization" was "fiscalization" in the original. I think the two words mean the same thing. As for the idea that the awards were "approved," in fact the work of the NPC is to determine if the awards as proposed treat Sao Tome's interests fairly. While the NPC's finding as stated by the chairman is couched in the negative - i.e., the awards do not harm Sao Tome's interests - that is the sum total of all findings the NPC needs to make, and is "approval" in the sense that the awards as constituted meet the standards set by the operant Sao Tome codes.

And here is the story in the original Portuguese. You will note it does not put as much emphasis on the lack of damage to Sao Tome's interests as we do above, but instead focuses on the President's self-removal from the NPC chairmanship:

São Tomé e Príncipe: Presidente afasta-se do Conselho Nacional Petróleo

14-05-2005 15:21:00.
Fonte LUSA.
Notícia SIR-7000233
Temas: política justiça economia são-tomé energia

São Tomé, 14 Maio (Lusa) - O Chefe de Estado são-tomense, Fradique de Menezes, anunciou hoje o seu afastamento do cargo de presidente do Conselho Nacional de Petróleo de São Tomé e Príncipe, face a acusações de irregularidades na adjudicação de blocos petrolíferos.

Fradique de Menezes fez este anúncio no balanço da reunião do Conselho Nacional de Petróleo que presidiu sexta-feira, na sequência de alegadas irregularidades registadas no processo que visa a venda de blocos petrolíferos de uma zona conjunta de exploração com a Nigéria.

O "auto-afastamento" de Fradique de Menezes surge cinco dias depois do Movimento de Libertação de São Tomé e Príncipe - Partido Social-democrata (MLSTP-PSD), no poder, ter acusado o Presidente de estar a violar a lei-quadro das receitas de petróleo em benefício próprio.

Na sua declaração à imprensa, Fradique de Menezes sublinhou que "o Presidente da República deve estar afastado destas negociações para evitar confusões", tendo acrescentado "deixar de presidir as reuniões do Conselho Nacional de Petróleo (...) e passar somente a fiscalizar o processo".

Além do MLSTP-PSD, que sustenta o governo do primeiro- ministro, Damião Vaz de Almeida, também o principal partido da oposição, o Partido da Convergência Democrata (PCD) disse que as negociações petrolíferas com a Nigéria estão descontroladas desorganizadas.

A denúncia de irregularidade na adjudicação de blocos de petróleo foi tornada público na capital de São Tomé através da RDP- África por alegado favoritismo de petrolíferas, nas quais, alguns dirigentes são-tomenses são accionistas, envolvendo, figuras próximas do Presidente da República, Fradique de Menezes.

Por outro lado, o porta-voz do Conselho Nacional de Petróleo, Ovídio Pequeno, declarou existência de "insuficiência de procedimento" no processo de leilão de blocos, mas afastou qualquer violação a lei-quadro de petróleo.

"O processo em nenhum momento lesa os interesses de São Tomé e Príncipe," sublinhou Ovídio Pequeno, que exerce também as funções de ministro dos Negócios Estrangeiros e Comunidades.

Denúncias de irregularidades surgiram poucos dias depois da última reunião em Abuja, capital nigeriana, do conselho ministerial conjunto de petróleo entre São Tomé e Príncipe e a Nigéria, no âmbito das propostas petrolíferas relativas a cinco blocos postos em leilão.

RCN.

Fim/Lusa

Update, 5/16/05:And finally, here is the Lusa report on De Menezes' resignation as head of the National Petroleum Council, which didn't get published until today, Monday, May 16.

16-05-2005 13:07:00.
Fonte LUSA.
Notícia SIR-7004297
Temas:

Sao Tome: Under fire, President leaves oil council chair, but remains watchdog

Sao Tome, May 16 (Lusa) -- President Fradique de Menezes has stepped down as chairman of Sao Tome and Principe's National Petroleum Council, while maintaining a watchdog role, in the wake of accusations by government and opposition parties of presidential wrongdoing in the process of awarding offshore exploration blocks.

De Menezes told journalists Saturday he was resigning as chair of the oil council to "avoid confusions", but that he would continue to "oversee the process".

His initiative followed a meeting Friday of the oil council.

The council's spokesman, Foreign Minister Ovídio Pequeno, told a news conference Saturday that, while "procedural insufficiencies" had been detected in the awards process, "at no moment have (the archipelago's) interests been prejudiced in the process".

Earlier last week, a presidential spokesman strongly denied allegations from the main governing MLSTP party and the biggest opposition PCD party that de Menezes was seeking personal benefit in the process to award five blocks in the islands' Joint Development Zone with Nigeria.

The bilateral Joint Ministerial Council, meeting in Abuja at the end of April, appeared to have agreed on the awards, but political infighting in Sao Tome has delayed their announcement.

RCN/SAS.

Lusa

Here is the relevant section of the draft "transparency" law that relates to the approval of awards, which is not specifically contemplated in the law, but may fall under the broad language "in any way related to the oil sector or related activities" in it.

That broad language doesn't encompass the section requiring that all "transaction instruments" be made public, but it could be argued that the law, which says "All Oil Contracts or other transaction instruments mentioned in paragraphs 1 and 2 above shall be made public by the State or by any Person, no less than ten days prior to execution," requires the awards document that is now a secret to be published upon request.

With that, we could learn which companies the Joint Ministerial Council decided should win what parts of the five blocks offered in this round.

"Approval" requires the vote of six of 11 members of the NPC, but the powers spelled out by the law do not enumerate approving the awards document.

The law does seem to require a finding - and a vote seems required whenever a finding is made - that no agreement signed by the Head of State does harm to state interests.

Interestingly, insofar as the legal process is concerned, the mechanism for an injunction against a Head of State's action, which would provide for a stay of any such action, prevents any injunction that would do grave harm to Sao Tome's interests, and it is stated that any injunction taken against a decision of the National Petroleum Council is itself a grave harm. Just below is that injunction section in its entirety:

Article 28
(Court actions)

1. Any Person whose rights are protected under this law may appeal final decisions made by any Administration body to judicial courts with jurisdiction.

2. Any appeal filed pursuant to paragraph 1 above shall stay the appealed decision unless such stay results in grave injury to public interest and the court so declares in a reasoned decision.

3. In the case of appeal of decision made by the Petroleum Oversight Commission in the exercise of its oversight power, it is presumed that any stay of any Petroleum Oversight Commission’s decision constitutes grave injury to public interest.

Here are sections of the transparency law relating to the NPC's powers (underlining added):

Article 22
(Public Competition)

1. All Oil Contracts or other transaction instruments to be entered into with the State Administration concerning Oil Resources or Oil Revenues, services relating to Oil Resources or in any way related to the oil sector or related activities, shall be preceded by public competitive tender pursuant to general law.

2. In the absence of legislation applicable to public tender, Oil Contracts or any other instruments mentioned in paragraph 1 above shall be approved by the Petroleum Oversight Commission prior to execution.

3. All Oil Contracts or other transaction instruments mentioned in paragraphs 1 and 2 above shall be made public by the State or by any Person, no less than ten days prior to execution, without prejudice to the terms of paragraphs 2, 3 and 4 of Article 20.

4. Oil contracts and other transaction instruments entered into in violation of this Article shall be considered void and without any effect, without prejudice to the liability of Officials and Persons perpetrating such violation.
5. The provisions of this Article shall not exempt any Person or State Administration Official of any legal obligation, except those obligations that are not consistent with this Article.

CHAPTER V
ENSURING PUBLIC OVERSIGHT AND ENFORCEMENT
SECTION I
PETROLEUM OVERSIGHT COMMISSION
Article 23
(Establishment of the Petroleum Oversight Commission)

1. A Petroleum Oversight Commission having legal entity status and administrative and financial autonomy shall be established to ensure the permanent oversight of all payment, management and use of the Oil Revenues and Oil Resources.

2. The Petroleum Oversight Commission shall be composed of eleven members, appointed or elected as follows:

a) One member appointed by the President of the Republic;
b) Three representatives of the National Assembly, one necessarily appointed by the
parliamentary groups from the opposition;
c) One counselor judge with at no less than five years of professional experience, appointed by the Superior Judiciary Council;
d) One representative from the Autonomous Region of Principe;
e) Two representatives from local governments;
f) One representative from Business Associations;
g) One representative from the Unions;
h) One representative from Non-Governmental Organizations.

3. The decisions of the Petroleum Oversight Commission shall require the affirmative vote of at least six of its members.

4. The organic law regulating the Petroleum Oversight Commission shall regulate the form of appointment and dismissal of the members of the Petroleum Oversight Commission, the duration of their terms, their compensation, and internal rules and conflicts of interests, as well as the organization and operation of the Petroleum Oversight Commission.

Article 24
(Authority and Powers of the Petroleum Oversight Commission)

1. Without prejudice to the oversight powers provided by the law to other government bodies, the Petroleum Oversight Commission shall have the authority to oversee the compliance of all activities with this law, namely:

a) The verification and regularity of the expenditures of the Annual Funding Amount;
b) Management and investment of Oil Revenues, including the exchange operations to the credit and debit of the Oil Accounts and their respective flow of funds in accordance with the Operation Rules and the criteria defined in the Investment Policy;
c) The enforcement of the transparency rules;
d) The external auditing firm’s audit;
e) The certification of the Production Commencement date.

2. To carry out its duties, the Petroleum Oversight Commission shall have the power to:

a) Request relevant information and documents from any Person;
b) Inquire about violations of any nature related to oil resources or oil revenues;
c) Initiate investigations and inquiries based on its own knowledge or on third parties’ complaints of irregularities or violations of the requirements of this law;
d) Carry out searches, inspections, and seizure of any documents or personal property that are the object, tool or product of any infraction, or that are necessary to the opening of the respective process;
e) Present reports that may include detailed description of any act subject to oversight, the investigation process, and inquiries initiated and closed, as well as recommendations as to the appropriateness of the adoption of new procedures;
f) Hear, judge and enforce administrative proceedings and minor infractions consisting of violations of this law;
g) Report to the competent authorities any irregularities or apparent violations of the provisions of this law that are subject to disciplinary, civil or criminal sanctions;
h) Act as a party to judicial actions.

Before we begin debating the meaning of this law, it might be wise to obtain a copy of the one which was actually enacted. This is the draft law.