PSC Dispute On JOA Settled, Contracts To Be Signed "In Two Weeks," Daily Punch Says; We Don't Believe It

In what apparently is yet another bald-faced lie, the Joint Development Authority of the Nigiera-Sao Tome and Principe Joint Development Zone have told reporters for Punch, a respected Nigerian daily, that the dispute that left the meeting of the Joint Mnisterial Council last Friday in shambles has been resolved and that Production Sharing Contracts will be signed in two weeks.

The familiar promise of action in a fortnight has characterized the JDZ process for years; Nigerian JDA officials repeatedly tell the press that issues will be resolved and action taken "in two weeks," but for reasons unknown the day never comes. Meanwhile, pumpers use the false information to improve the share price, selling into it as the price climbs.

Here is the Punch article

Monday, February 27 2006

JDZ: Nigeria, Sao Tome disagree

Michael Faloseyi, and Clara Nwachukwu

The signing of the Production Sharing Contract for Block 4 in the Joint Development Zone being operated by Nigeria and its neighbouring Sao Tome and Principe has been suspended.

JDZ sources, told our correspondents that the suspension of the signing of the PSC on Friday, in Abuja, was as a result of “some minor procedural disagreements on the PSC.”

However, the Joint Development Council has settled the matter and rescheduled the signing of the PSC within the next two weeks.

A JDZ source confirmed that a minor disagreement arose because of “a last minute request by the Sao Tome and Principe representatives to approve the PSC before the consortium signed it.

“Their request was not legitimate because the details of the PSC would have been resolved by the JDC. But their request had to be treated diplomatically, and the matter has been resolved amicably.”

Nigeria’s Minister of State for Petroleum Resources, and Chairman of the JDC, Dr. Edmund Daukoru, expressed the government’s displeasure over the delay and asked the Sao Tomeans to apologise for the setback.

He said, “This is not good. It does not send the right signal to the outside world in terms of doing business with the JDZ.

“Nigeria takes no responsibility for this embarrassment. What happened here today would not jeopardise the spirit of the agreement on the JDZ. This is still better than fighting on a piece of land and Nigeria will try its best to implement the treaty.”

The JDZ is jointly operated under a partnership agreement of 60 to 40, in favour of Nigeria.

Friday’s disagreement was caused by the inability of the parties to agree to the terms of the Joint Operating Agreement for Block 4 in the zone.

Representatives of the consortium of oil companies that include Addax, Environmental Remediation Holding Company, Godsonic Oil and Gas, Hercules and Centurion that had gathered for the signing ceremony for the production sharing contract left the venue disappointed.

Block 4 was awarded to the consortium that had a multinational oil company, Noble, as the operator during the 2004 bid round. Noble’s withdrawal had caused the initial controversy until Addax, another member of the consortium, took over as the operator.

A PSC is the document guiding the relationship between the state parties and operators or the oil companies while JOA guides relationships among the oil companies on an oil block and has no direct impact on the state parties.

Not even the explanation by the Nigerian party that Sao Tome and Principe had no business with the JOA could dissuade that country’s representatives from their hard stance, thereby frustrating the signing of the PSC.

Attempts to get the reaction of the Chairman of the Addax Group, Mr. Jean Claude Gandur, who flew in from Geneva for the signing ceremony were rebuffed.

The PUNCH, Monday, February 27, 2006