Unlike articles from Reuters, Agence France-Presse, Rigzone and various Nigerian newspapers that concentrated strictly on a Chevron press release, the Punch story by Clara Nwachukwu offers some useful chat about other blocks in the JDZ, although it fails to present accurate information about signature bonuses on other blocks - especially Block 4.
In Blocks 2 and 4, both of which abut Block 1, high bonus fees and complicated partnering arrangements have delayed signing of Joint Operating Agreements with partners and players and Production Sharing Contracts with the Nigerian and Sao Tomean governments.
The bad news is the lowball estimate of possible reserves in the Gulf of Guinea JDZ, which in this article have fallen to "six to 10 billion" barrels of crude compared to estimates from the likes of the Houston Chronicle last February of up to 14 billion barrels.
The good news is that Chevron and a smaller partner, EEL/Afren, feel the chances of hitting oil are 55 to 56 percent.
Here is the article, from this morning's editions:
Chevron begins JDZ exploration in January
Clara Nwachukwu with agency report
United States energy giant, Chevron, has said it plans to commence drilling of its oil wells in the Nigeria/Sao Tome and Principe Joint Development Zone from January, 2006.
Chevron aims, therefore, to set the record as the first of the oil companies given licences to operate in the JDZ to begin exploration activities, estimated to cost it about $60million.
Agence France Presse, quoting a spokesman of the company on Friday, said the oil wells situated in Block 1, which it won in 2003, would begin commercial oil production in the zone by 2010, if significant amount of crude was discovered.
The well has a depth of 1,700metres (5,600feet), which Chevron hopes would be completed within 60 days.
The block carried a signature bonus of $123million and is the first of six blocks in the zone to be jointly awarded by the two countries.
The two countries awarded five other blocks adjoining Block 1 to various consortia in May, but have yet to sign production sharing contracts with them.
Under the treaty signed in 2001, Nigeria will get 60 per cent of all oil and gas revenues from the zone while Sao Tome will receive the balance of 40 per cent.
The first process of acreage allocation in the Nigeria/Sao Tome and Principe JDZ began on August 23, 2003 when the 2003 NDZ Licensing Round opened for nine blocks.
At the expiration of the deadline, 33 bids were received from 20 oil firms, both multinationals and indigenous companies.
Block 1 with surface area of 704 square kilometres, was subsequently awarded to Chevron as the operator with 51 per cent interest and Esso Exploration and Production Niger-Sao Tome (One) Limited (“ESSO”), and Dangote Equity Energy Resources with participating interests of 40 per cent and nine per cent respectively.
But other blocks were not awarded in that round due to lack of technical and commercial competence on the part of the companies.
Thereafter, Blocks 2 to 6 were offered for bids in the 2004 JDZ Licensing Round.
The five blocks formed part of the blocks that were not awarded in the 2003 Licensing Round. Block 1 to 6 have total surface area of 4,568 sq.km or 13.2 per cent of JDZ. Consequently, award of blocks 1 to 6 would leave 86.8 per cent of JDZ for future investors.
During the bid rounds, Block Four attracted bids of up to $175million, while Block Two commanded a top bid of $135million while the three other blocks attracted much more modest offers of between $37million and $45million
It was projected that the signing of Sao Tome and Principe’s first offshore oil contract, will trigger an immediate windfall payment of nearly US $50 million.
The Nigeria/Sao Tome and Principe Joint Development Zone, defined by formal bilateral Treaty, is an area of overlapping maritime boundary claims that is being jointly developed to the benefit of the two countries and add to the proven West African frontier potential.
With Chevron given the right to conduct exploration activities in deepwater JDZ Block 1, the fiscal terms were negotiated as part of the PSC for JDZ Block 1 and will form the basis for future PSC terms in the JDZ.
The JDZ is estimated to hold substantial reserves, possibly as much as six – 10 billion barrels.
The PUNCH, Monday, December 05, 2005
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