JDA Delays PSC Signings

UpstreamOnline's veteran oil writer, Bary Morgan reports this morning that an overworked Nigeria-Sao Tome and Principe Joint Development Authority staff has crumbled under the workload of negotiating Production Sharing Contracts with the winning bidders large and small in the 2005 Licensing Round.

The share price of ERHE, meanwhile, which closed yesterday at $0.385, was buoyed four-one thousandths of a cent by crude oil's rise to nearly $67 a barrel on international markets.

Unable to meet the deadlines it set just last week, the JDA has pushed them back so that - at least according to the new deadlines, which could change half a dozen times, by past experience - the entire process will now not be completed until December.

The former schedule we reported last week was abruptly removed from the JDA Website and replaced with a new one without the slightest hint of an explanation from JDA officials. The JDA Website is http://www.nigeriasaotomejda.com.

Here is the latest UpstreamOnline report from Barry Morgan:

DELAYS have been announced for the second time this month in efforts by Nigeria and Sao Tome & Principe to licence deep-water acreage in the Gulf of Guinea, writes Barry Morgan.

The Abuja-based Joint Development Authority, which manages the exercise, has indicated the process is unlikely to be completed before mid-December.

Chevron will sink the drillbit in October in Block 1, while hopes that exploration could start on Blocks 2 to 6 this year have receded.

The Joint Ministerial Council did not expect to receive the "standard production sharing contract" documents from licence winners until 8 August, but anticipates reaching approval stage by 22 August.

PSC talks between the JDA and participants should be concluded before 13 September for Block-2, by 15 September for Block-3, and 19 September for Block-4, with blocks 5 and 6 finishing over the following couple of days. The harmonised drafts should be finalised by 12 October for approval by the council on 21 October, according to the JDA.

Instead of running talks on the Joint Operating Agreements concurrently, it has been decided to delay these until all the PSCs are concluded.

The JDA does not therefore expect companies to submit agreements until 3 November, before reaching signature stage that same month.

The JDA plans to stagger signatures for blocks 2 to 6 through the second week of November, with the deadline for paying signature bonuses falling exactly one month later.

It is believed the Nigerian oil bureaucracy is wilting under the workload thrown up by the concurrent exercise to licence the Nigeria and Sao Tome Exclusive Economic Zone.