New Mutwadadi Comment: It's Time For Sao Tome Elite To Lead; Is JDZ Imperilled?

In a second note from our gifted seer mutwadadi, the well-informed source that told us first of the impending block awards and the pullout of Noble Energy from Block 4, he says the Abuja Declaration (the treaty that established the Joint Development Zone) is fundamentally endangered by the unilateral request from Sao Tome's attorney general - condemned by the country's Justice Minister last week for his "abuse of power" and "Western Bang! Bang!" style of justice - for U.S. help in determining if Houston-based, Nigerian-owned ERHC Energy violated U.S. laws sometime in the nine-year period before it was granted equity rights in the Nigeria-Sao Tome and Principe Joint Development Zone.

Here is the second note from mutwadadi:

I wonder also if the final report as published reflects entirely what US investigators wrote. It seems as if the attorney-general may have put his own stamp on it.

The real bottom line in any treaty situation is that one party might seek arbitrarily to end that treaty obligation if it is shown to have broken down. In this case, as both parties knew before they went for the JDZ, a formal, legally binding border demarcation could take years - six in the case of Nigeria and Equatorial Guinea, where it was done amicably - and eight in the case of Nigeria and Cameroon, where it was not done amicably, and still has not been implemented (by Nigeria).

Nigeria can walk away from this and will still be producing 2.5m barrels/day. Everything on block 1, even, would be frozen, money would have to be returned, and Sao Tome will be producing 0 b/d. Menezes and others in Sao Tome know this very well, and also know that even if there was no JDZ, there would still be ERHC - an issue Sao Tome alone created.

The JDZ was a short cut, and as with all short cuts, it comes with some compromises. Nigeria also understood this, and officials, for all the flaws, curbed some of the instincts they have and pressures they faced. The 2004 round was better than the 2003 round; both were better than the 2005 round in Nigeria and light years ahead of what Sao Tome achieved by itself.

Sao Tome executed a series of exceptionally ill-advised deals in the late 1990s with a host of companies, including not only ERHC - before Nigeria or Offor came on the scene - but also Mobil and PGS. The very people who signed those deals are actually the ones who have led the opposition to the 2004 round and ERHC. These are the officials and politicians who got Sao Tome in the mess in the first place!

Except it needn't be quite such a mess if they chose collectively as an elite in Sao Tome to follow what effective politicians everywhere do, which is to take a situation that amounts to less than an ideal outcome - and in a treaty situation neither side will get entirely what they want - and then seek to make that outcome, such as it is, work best in the national interest. And that is what foreign experts should have done, but this report conspicuously fails to achieve...

mutwadadi

Gee, my opening paragraph was a 113-word sentence. Sorry about that!