The article, focused on India's reaction to China's entrance into the rich Akpo field after an Indian bid was not supported by the Indian government, doesn't mention the Nigeria-Sao Tome and Principe Joint Development Zone, where ONGC has also won property, but along with the Indian rebuff of the company's bid it raises questions about the Indian government's willingness to pay for a piece of the JDZ - expecially now that PSCs are not getting signed and it appears Sao Tome's government is always going to be dilatory and recalcitrant about approving any awards.
The Indians, a sensitive and complex people, may see the problems surrounding ERHC Energy as ones they, too, could face in a changing political climate. The bidding, re-bidding and constant political bickering and delays have not inspired confidence in anyone about the value of contracts and rights that are now subject to political interference and the influence of huge multinational corporations like ExxonMobil. It was to avoid just such uncertainties that the JDZ was created, but even by a generous interpretation of events, it has already failed, perhaps for good.
With the grand entrance of the Chinese as major players in Nigerian fields, American goals of getting 25 percent of its domestic oil needs from Nigeria are fading into unreality. America seems unable to wake up.
The U.S. State Dept. and Senate Commerce Committee have been notably lax in reining in the Machiavellian imaginations of multinationals based in the U.S., with the result that Nigeria is now awarding blocks that America probably needed to its economic foes because it is tired of the manipulation, demands and political influence of U.S. interests here.
Indeed, to be a better friend to Nigeria, and enjoy a warmer welcome, the United States must reduce the weight of its diplomatic, political and economic tactics and start dealing with Africa's most strategic nation from a friendly and respectful distance.
But Nigeria has a sad lesson to learn as well. American and other multinationals have cash in the bank to pay their way through these oil deals, but like ONGC, CNOOC's deals are subject to government approval - and, so far, there has been no mention of such approvals in any coverage of the Akpo affair.
We are reminded of this by the forlorn experience of Canada's Ivanhoe Energy, whose stock and prospects faded into near-oblivion waiting for the Chinese government to pay for a $20 million CNOOC promise after a natural gas disaster was laid at CNOOC's door. The Chinese company suddenly became a political football, and all its payments stopped; in the end, the money was almsot a year late in coming.
Maybe that's why China doesn't mind paying a premium for the field - it may not plan to pay for a long time after contracts are signed, and it will have a thousand excuses why.
Here is the ThisDay Online story:
Akpo Field: India Reacts on Sale to Chinese Investors;
China vows to improve ties with Nigeria
By Samuel Famakinwa with agency reports, 01.10.2006
The Indian government has said it has no regret in taking the decision to stop its state-run Oil and Natural Gas Corporation (ONGC), to acquire 45 per cent shares of South Atlantic Petroleum in Akpo oil field, located in oil prospecting licence (OPL) 246.
In what seems like another Chinese victory over India in the battle to secure strategic oil assets, China National Offshore Oil Company Limited (CNO OC), Monday secured the offshore field pledging to pay N2.3 billion in cash.
Following this deal, China also vowed yesterday that it would improve ties with Nigeria as the country’s foreign minister is expected to be in Nigeria between January 16 to 17 on an official visit.
Indian Petroleum Minister, Mani Shankar Aiyar was reported to have said yesterday that “India has no regrets of letting pass a recent opportunity to buy a stake in an offshore oil and natural gas exploration field in Nigeria”.
The minister was quoted by Dow Jones Newswire to have stated that "Our cabinet took all factors into consideration and felt that this wasn't a commercial opportunity worth pursuing”.
According to Aiyar, "We have absolutely no regrets,” while declining to elaborate further on the deal.
CNOOC's success resulted from the misfortune of India's largest oil and gas company as ONGC, the international exploration subsidiary of ONGC Videsh Ltd., had won the bidding for Akpo field in December 2005, only to have the purchase blocked by its government.
The Indian cabinet had contended that the bid of more than $2 billion wasn't commercially viable, providing the opportunity for CNOOC to move in.
In a major loss of face to ONGC, the India’s Cabinet Committee on Economic Affairs had December 15, 2005 shot down its proposal to acquire a 45 per cent stake in a Nigerian oil and gas field for close to $2 billion saying the deal was “too risky.”
The meeting, chaired by Prime Minister Manmohan Singh was said to have decided that ONGC cannot be allowed to buy the Theophilus Danjuma-owned South Atlantic Petroleum's 45 per cent stake in the Akpo oil and gas field.
"This is a major face loss for us," a top executive of ONGC was quoted to have said after the company was stopped because it was the first time ONGC would beat its arch rival, CNOOC to clinch the field that is estimated to hold 1.6 billion barrels of oil reserves.
In recent times, ONGC had lost to the Chinese, the race for getting a slice of fallen Russian oil major Yukos' main producing asset and acquisition of Canada's PetroKazakhstan (which has most of its operations in Kazakhstan) and EnCana's Ecuador assets.
Though it had teamed up with China National Petroleum Corporation (CNPC) to bid for the Syrian assets of Petro-Canada, Akpo was the only case where it had managed to beat the Chinese.
ONGC was reckoned in the international market as the only serious competition to the Chinese prowl for overseas oil and gas properties but with the Government shooting down the Nigerian proposal, it lost considerable credibility in the market.
South Atlantic Petroleum, owned by the ex Nigerian Defence Minister, Danjuma, is selling the stake in the field, which after 2008 will pump 225,000 barrels a day of sweet crude oil which development will cost another $4 billion.
CNOOC’s investment means that it is paying about $4.60 per barrel, compared with a $7.30 per barrel valuation placed on Petro-Kazakhstan by China National Petroleum Corporation, the successful bidder.
Total SA of France holds 24 per cent of the field that lies about 200-km off the coast of Port Harcourt and Brazil's Petroleo Brasileiro SA owns 16 per cent, while the remaining is owned by the Nigeria National Petroleum Corporation (NN-PC).
The Akpo field was discovered in 2000, and is located 200 km offshore in water
depths ranging from 1,100 to 1,700 meters. Energy consultancy Wood Mackenzie estimates Akpo has condensate reserves of over 600 million barrels and commercial natural gas reserves of 2.5 trillion cubic feet.
However, Standard & Poor's ratings services said its rating on CNOOC Ltd will not be affected by the company's bid to acquire the Nigerian field.
Standard & Poor's said yesterday it is keeping its rating on CNOOC at ‘A-’, with stable outlook.
The rating reflects its expectation that CNOOC Ltd will maintain its financial policy while pursuing growth opportunities, it said.
It said the transaction is consistent with the company's stated growth strategy of expanding and diversifying its production base, and is well within the oil company's financial capabilities.
Meanwhile, Chinese Foreign Minister will upgrade political and economic ties with Nigeria during his upcoming African visit, Chinese Foreign Ministry spokesman, Kong Quan, said yesterday.
Foreign Minister Li Zhaoxing will visit Nigeria from January 16 to 17 as part of a six-nation African tour, Quan told a regular news briefing.
Zhaoxing will sign a memorandum of understanding on the China-Nigeria Strategic Partnership and an economic and technical agreement, Quan said.
"These agreements are very important because China-Nigeria relations are developing steadily and bilateral economic and trade cooperation is expanding.
"The signing of the agreements will further promote and accelerate the development of bilateral relations," the spokesman said.
Zhaoxing will pay official visits to Cape Verde, Senegal, Mali, Liberia, Nigeria and Libya from January 11 to 19, according to the Chinese Foreign Ministry.
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