An Urgent Note From Doc: Offor Has Carved A Deal Of 'Truly Extraordinary Magnitude'; A P.S. Is Added

One of our two reliable African informants, Doc, has a follow-up today to his message on Wednesday (which arrived Tuesday). Again, however, I did not see the message until 4:13am Saturday morning, as I write this, but I am posting it immediately. The message arrived at 12:18:13pm Friday (Note: A P.S. to this first note arrived Sunday and appears below, after the Friday post):

Dear Mr. Shea,

First, just one small but amusing correction about my last email to you: it was sent April 25 at 1:59 PM my time, which is why I wrote "about 7 AM your time". If you were *West* of me I would be living somewhere in the middle of the Pacific Ocean!

On March 6, I wrote "Mr. Shea, please keep in mind that it is only *one* possible scenario in a very tangled web of power and control with half a trillion dollars at stake, and possibly much more." We now know that the value of O&G in the JDZ is most certainly on the "more" side. For the past six weeks the web has been slightly "untangled" - as I had announced, at least two of the smaller indies have sold out. Note who they sold out to... it was most likely all pre-arranged.

Looking further back, if things had not gone Chief Offor's way with Pioneer, Devon or Noble (which proved true) or even Addax (although this was much more unlikely; again, their CEO Mr. Gandur was born in Egypt and "knows the African ways"), two of my sources had told me that he would simply turn to the Chinese. Why? First, the Chinese have been courting both Aso Rock and a number of Nigerian businessmen for *several years*.

Many important things were discussed during President's Obasanjo's visits to China in 2005 and culminated with *very* strong activity in the fall. And second, right around the same time Chief Offor was being very cordial with Chinese oil representatives - and as you may have surmised, he is not known for being much of a cordial man. In any case, the recent developments seem to completely confirm my earlier information.

On March 20 I wrote:

"*Everything* I have heard *confirms* the mammoth discovery by operator CVX at the edge of block 1, the one I referred to - and gave the exclusivity to your blog - on March 6. Expect, however, that CVX will also use every trick in the book to minimize it and disclose as little as possible to the JDA and to outsiders, at least in the near future."

While this has proved abundantly true, I must say I am absolutely shocked that six weeks later Chevron apparently still has not released to their shareholders even the smallest bit of factual information on this gigantic discovery. Are they not required to do so by law in your country?

Regardless, the information is filtering out. Negotiations have been intense, especially between mid-March and mid-April and from what I heard again this Friday morning, are supposed to be concluded "by month's end at the latest."

What should Chevron "get"? I would venture to say a very large large amount of oil that should look quite good on their Reserves List, but *NOT* the lions' share as far as the JDZ as a whole.

I would expect them or Exxon to go to plan B and absorb Anadarko by year's end in order to somewhat save face for America and show a higher overall percentage in the GOG. It will still be a very poor showing compared to Europe's and China's.

What should ERHE "get"? Whatever the final details, it is very obvious that in the current energy crisis context, and with the patient, clever help of very high-ranking Nigerian and Chinese officials, Chief Offor & Co have carved a deal of truly extraordinary magnitude. I do not know when or in what form the final deals and drilling schedules for each round 2 block will be made known, (official? leak? probably the latter from within one of the companies) but it is now clear that it could not have been this week with Big American Oil releasing already enormous profit reports. Perhaps that was the real reason. I expect that the news will come, as you Americans like to say, "out of left field," that is to say, probably anytime starting Monday.

In the Spirit of Respect and Friendship,

Doc

I got a follow-up to the first note yesterday, and although it references a P.S. below, there was none in the orginal message.

Dear Mr. Shea,

I have been on the road again and I just now had a chance to look at your Website on this Sunday nite. For some reason the Post Scriptum of the last email I sent you on April 28 vanished. I am not sure what happened, but here it is again.

PS: Assuming the Chinese take a significant stake in ERHE, at what price level would that be, and how would this happen? These are legitimate questions at this point in time.

As to the former, I would say that the $8-9 per share I had conservatively advanced in a previous email that analysed share price would still stand - please be so kind as to re-post this for your readers. I am between airports and I do not have a copy of it right now, I believe it was sometimes in early March.

One should adjust these figures up (presumably) or down as per one's own interpretation of what has transpired since, of course. As to the latter, it is much a more difficult question, and as a businessman myself I am sorry to have to say that the Brandhuber era has brought no sign whatsoever of changes in the company's secretive ways. I can only conclude that the Offor clan is still completely in control of all PRs and such.

As a result shareholders would be wise to keep a close eye on their portfolio. Looking at past history, what a trusted advisor says is most likely to happen is that those who did favors to Chief Offor will know ahead of time when the Chinese deal will *officially* be in place and released. The price will most likely experience a sudden and enormous increase and I would expect them to then immediately sell very large amounts of shares to realize the profits they have long been promised. Whether the new share price would withhold such an assault is anyone's guess and could also largely depend on a true, detailed business plan being announced or not. Again, I do *not* know when this might happen; it could be Monday morning, or in weeks or months.

I would like to add one new thought if I may. Some, both in Nigeria and America, seem to want to make the current situation far more potentially conflictual than it really is. It is not all just about big money, it is also about finite amounts of resources.

I would urge people to remember three things. First, both Mr. President and Dr. Daukoru have stated many times that they want to reshuffle the cards so that Nigeria
can proudly develop its own O&G industry. *They* are holding the key cards and I am quite certain that they will have their way - China understands this and has brilliantly played along, America doesn't.

Second, regardless of post obo-1 negotiations the GOG's mammoth field(s) will translate into mammoth revenues for *all* parties involved. But this planet is running very short on oil and finds of this magnitude do change a lot of things (look at how life has changed in Qatar or Saudi Arabia over the last 50 years) and little could be gained by Chevron and Exxon keeping with their usual arrogance and disastrous one-sided ways of doing business.

And third, as a Nigerian-owned American company that may very soon also be partly Chinese-owned, ERHC Energy *may* consequently become the poster child for international cooperation betwen Africa and superpowers in the energy sector. The company has the making of such a new model, we shall know fairly shortly if it is just one man's vehicle for extreme enrichment or if higher powers decide that it should live up to this historic opportunity.

On another note, I would like to kindly remind your readers that it was *after* Mr. Shea smartly asked if it would be alright with me to simplify my complicated initials into "Doc" that I agreed and signed my emails accordingly. It would be very unwise of me to sign my name, and I would dare say that with the exception of perhaps a few of your African readers no one could pronounce it correctly anyway.

In the Spirit of Respect and Friendship,

Doc

China Steel Co. Takes Interest In 4 Iffshore Blocks, But Rebels Militants Oppose Deals

In a move opposed by the restive Ijaw militants whose MEND organization has disrupted a fifth of the Niger Delta's oil output over disputes about the unfair allocation of oil revenues to the region, Chinese Premier Hu Jintao signed an agreement with Nigeria Thursday night that will let the Asian giant take positions in four inshore blocks located in the Niger Delta, the Associated Press reported.

The response from the Movement for the Emancipation of the Niger Delta was short and not-so-sweet: "They should go back to China and do all these things they say for the millions of starving Chinese. We want control over our resources, not Chinese management and development," a spokesman said.

Here is the AP story:

China's Hu Signs Oil Deal With Nigeria
Thursday April 27, 2006 8:16 PM

By DULUE MBACHU
Associated Press Writer

ABUJA, Nigeria (AP) - Chinese President Hu Jintao said Thursday his government will seek closer ties with Africa - a resource-rich frontier for the world's fastest growing economy - after signing a series of major business deals with oil-rich Nigeria.

Hu, on the second and final day visiting Africa's largest oil producer before heading to Kenya, said China is seeking ``a strategic partnership'' with the continent that would improve living standards for Africa.

Hu and Nigerian President Olusegun Obasanjo signed an agreement Wednesday that requires Nigeria's petroleum ministry to give China's state oil firm preferential access to four blocks of oil exploration rights in return for China taking over a money-losing refinery in the northern city of Kaduna.

China also agreed to build a hydroelectric power station in the northeastern Mambilla plateau and a fast-rail system linking the capital, Abuja, with the economic capital, Lagos.

And two Chinese telecommunication firms will install rural telephone service across large swathes of Nigeria with the help of Chinese government loans worth more than $200 million.

China's interest and growing profile in Africa has worried Western rivals for the continent's resources and markets. And some Africans have complained about being flooded with cheap Chinese goods.

Nigeria is the top African producer of crude and the seventh-largest in the world, normally pumping 2.5 million barrels per day. It was the first sub-Saharan Africa stop on a tour by Hu that has included the United States, Saudi Arabia and Morocco.

Militants claiming responsibility for oil-installation attacks and kidnappings that have shut down more than 20 percent of Nigeria's oil production this year vowed more violence in response to the Chinese deals.

"They should go back to China and do all these things they say for the millions of starving Chinese. We want control over our resources, not Chinese management and development," the Movement for the Emancipation of the Niger Delta said in an e-mail to The Associated Press.

China is hungry for the energy, timber, minerals and other raw materials Africa can provide, and in January, China's state-controlled oil firm, CNOOC, announced it had reached a deal to pay $2.3 billion for a 45 percent stake in a Nigerian offshore oil field.

Obasanjo's office said as Hu wrapped up his visit Thursday that China had granted Nigeria $5.7 million in aid to be used in part to buy anti-malaria medicines and to train Nigerians in malaria control and prevention.

With 130 million people, Africa's most populous country is also a major market for Chinese-produced goods. Chinese companies have been accused of flooding local markets with fake and substandard goods, notably textiles. In December, Nigerian officials took the dramatic step of shutting down several shopping centers run by Chinese traders in Lagos.

In the last five years, China's trade with Africa has grown fourfold, to $40 billion in 2005.

The world's most populous country, with 1.3 billion people, has also set new development targets to increase its gross domestic product and lower energy consumption, the Chinese leader told Nigerian lawmakers Thursday.

"By the year 2020 ... GDP would quadruple that of 2000 to reach $4 trillion, averaging $3,000 per head," Hu said.

China, a veto-wielding U.N. Security Council member, also has offered key diplomatic support to some governments shunned by the West, like Sudan and Zimbabwe.

Associated Press reporter Bashir Adigun contributed to this report from Abuja, Nigeria.

Equator Ups Its Stake In Block 2

Equator Exploration has made a move in Block 2 of Nigeria-Sao Tome and Principe Joint Development Zone, announcing today that it has acquired the minority interest of independent Nigerian firm A & Hatman - about which little is known - to increase its percentage of equity in the highly prospective block from 6 percent to 9 percent, the company announced in a press release today.

EER, which is traded on London's AIM, also annnounced that it is also purchasing equity in another Nigerian offshore block, OML 122.

EER's Wade Cherwayko, a former ERHC Energy executive, said EER and its Indian partner, ONGC Videsh, have received approval from the Nigeria-Sao Tome and Principe Joint Development Authority and still need final partner approval and an okay from the JDZ's Joint Ministerial Council.

EER has been a subject of envy since it listed on AIM last year and flew from a low of about 77 pence to a close yesterday at 339.25.

Here is the EER press release:

Drilling Update on CML 122 and Increased Interest in Block 2 JDZ
April 28, 2006

Peak and Equator continue drilling on OML 122

Equator acquires an additional 3% interest in Block 2 JDZ

Equator now has a total 9% interest in Block 2 JDZ

LONDON, United Kingdom & LAGOS, Nigeria - 28 April 2006 - Peak Petroleum Industries Nigeria Limited ('Peak') and Equator Exploration Ltd. (AIM: EEL.L) ('Equator') continue their drilling operations on the Owanare X1 well on OML 122 located offshore Nigeria. After some slight operational delays in the drilling program, Peak and Equator anticipate announcing the initial well results within approximately seven to ten days.

Equator is pleased to announce that it has increased its net participating interest in Block 2 of the Nigeria/Sao Tome and Principe Joint Development Zone ('JDZ') from 6% per cent to 9%. This follows the acquisition by Equator and its partner ONGC Videsh Limited of a 7.5% interest held by A. & Hatman Limited ('Hatman'), a Nigerian E&P company. The assignment of Hatman's interest to Equator has been approved by the Nigeria/Sao Tome and Principe Joint Development Authority ('JDA'); the transfer is subject to final partner and Joint Development Approval.

JDZ Block 2 is adjacent to Nigerian Block OML 130 which hosts the 700 million barrel and 2.5 TCF of gas Akpo field and another series of discoveries totalling an additional 500 million barrels and several TCF of gas as well as several additional developing discoveries with reserves in excess of 500 MMBO and several TCF. Akpo is anticipated to begin production in 2008 with maximum rates currently forecasted to reach 175,000 BOPD.

The JDZ is located approximately 200 kilometres offshore Nigeria and was established in 2001 following the ratification of a bilateral treaty between Nigeria and the island nation of Sao Tome and Principe. The JDZ is administered by the JDA.

Commenting on the increased interest in Block 2 of the JDZ, Wade Cherwayko, Chief Executive Officer of Equator, said:

'We are delighted to have increased our net stake to 9% in the very prospective Block 2 JDZ, located in the highest potential exploration region in the Gulf of Guinea.'

For further information, contact:

Wade Cherwayko, Chief Executive Officer
+44 (0)20 7235 2555

Philip Dimmock, Chief Operating Officer
+44 (0)20 7235 2555

Mystery Buyer Is Not Sinopec, Per UpstreamOnline

The latest from UpstreamOnline, released this evening, indicates that the Chinese company taking a piece of ERHC Energy is not Sinopec.

In the article, a company spokesman says it has no designs on companies listed on non-Chinese bourses. That caveat would seem to exclude ERHC from consideration for a buy-in, takeover or other acquisition by Sinopec, as it is a U.S.-listed, publicly traded company.

It also stirred questions on the message boards, as the story seemed to contradict the words of Sinopec's vice-chairman to the Wall Street Journal just last month:

"Now, buying a company overseas might cause too much of a shock. That's why we prefer to buy a stake or join in cooperation -- it's more flexible," said Wang Jiming, vice chairman of the board for the listed arm of the state-owned company known as Sinopec."

But Sinopec is only the second largest of Chinese oil companies. Chinese Petroleum Corp. and CNOOC both have ample resources for such an acquisition, and other companies may as well.

The buyer mentioned by Doc in his post yesterday is said to be interested in ERHC's overall equity, not just its assets in Block 2, where it is partnered with Sinopec in the operatorship consortium.

Here is the Upstream article, one of the best ever regarding the company's immediate-future intentions:

Sinopec shuns risks

By Upstream staff

China's Sinopec, keen to keep financial risks to a minimum, has said it will not acquire upstream assets owned by publicly-listed foreign companies.

"It is not our intention or desire to buy into listed foreign companies," said Sinopec chairman Chen Tonghai.

When elaborating on the company's new overseas acquisition strategy in Beijing last week, Chen said his company will also aim to avoid risks caused by crude prices and the equity market in order to maximise returns for investors.

Instead, Sinopec's investment strategy is mainly focusing on exploration, although it is also eyeing oilfields in which it is interested in taking a stake or acquiring.

Chen said Sinopec's acquisition activities were not aimed at helping China meet its increasing demand for oil specifically, dismissing suggestions that the Chinese government is encouraging state-owned oil companies to secure supplies amid domestic shortfalls.

"Domestic demand cannot be met by Sinopec's equity oil," he said, adding that the company's overseas upstream acquisitions do not mean it will have to send its output back to China.

"We must separate investment in the foreign upstream sector from oil imports," he said.

Chen added that Sinopec will sell its equity oil in the international market and import crude elsewhere when the price is good.

"What we are concerned about is to maximise the return (for our investors)," he said.

"For example, the oil sands we produce in Canada could be sold in North America."

Sinopec is China's largest oil importer, accounting for 85% of China's total.

The company has made several acquisitions, with the latest deals including a million contract for a stake in Canada's Northern Lights oil sands project and a 50% stake in Angola's Block 18.

It is also working to conclude a deal with Iran to develop the Yadavaran oilfield, one of the largest undeveloped fields in the country.

Sinopec is also ready to bid for TNK-BP's $2 billion oil production unit Udmurtneft, which is producing 120,000 bpd and has reserves equivalent to about 1 billion barrels.

In March 2004, Sinopec made headway in Saudi Arabia by signing a natural gas exploration and development agreement with the Ministry of Petroleum and Saudi Aramco for section B in the Rub Al-Khali basin.

The deal involved forming a joint venture in which Sinopec holds an 80% stake and Saudi Aramco has 20%.

Under the agreement, Sinopec is to invest $300 million over the next five years.

Sinopec also holds exploration acreage in Algeria, Oman and Nigeria.

Looking forward, Sinopec aims to increase its overseas reserves by 65.2 million tonnes (489 million barrels). It also wants to raise overseas output sharply from last year's modest 200,000 tonnes (4000 bpd).

At present, the company is executing 10 production sharing contracts outside China, out of 25 so far signed.

China expects equity crude output by its companies from overseas oilfields to increase at an annual rate of 8% to reach 70 million tonnes per year (1.4 million bpd) by 2020, more than four times the current volume.

The country's booming economy has led to a surge in demand for oil, with imports hitting a record high last year after jumnping 35% in 2004.

-

Audioblog: Big News From Doc

Block 1 Find 'Gigantic,' Doc Says; Chinese Take Stake In ERHC; Chevron Chief Speaks Of 'Major Discovery' In Nigeria

In a major development, the reliable African source known as Doc has revealed exclusively to ERHC On The Move - in a post we did not see for a day after it was sent - that the Block 1 find by Chevron in the Nigeria-Sao Tome and Princiope Joint Development Zone is of "gigantic" proportions and large enough to transform the African economy.

Moreover, he says, he learned yesterday morning just after midnight that an unnamed Chinese firm is taking a stake in ERHC Energy, Inc.'s overall Gulf of Guinea positions, and that the deal in the works is likely to make Sir Emeka Offor "the richest man in Africa."

The unreported news came well before a sharp drop in ERHE share price, which closed down $0.05 today on slightly higher than average volume of 2,078,524, about 300,000 more than our recent daily average of 1.8 million shares.

The last sale was at $0.75 at 5:09pm EDT, and the closing Bid and Ask were $0.74 x $0.75.

Here is the latest from Doc, whose message was mailed Tuesday evening April 25 at 13:59:04 +01 but unseen until this evening:

Dear Mr. Shea,

CVX drilling at the edge of block 1 only revealed the "tip of the oil iceberg". Those in-the-know in Nigeria are now 99% sure that the Gulf of Guinea is a mammoth O&G discovery that will bring decades of unprecedented revenues to the region. This gigantic structure will mostlikely keep oil companies busy in all blocks for a very long time! Just two hours ago (about 7 AM your time this 25 April) I also learned something which I thought I would pass on. This comes from a *very* trusted source of mine who is intimately familiar with ERHC Energy and the Offor clan and says: "A major Chinese oil company is taking a stake in ERHE and in its very large rights in the JDZ. I believe Chief Offor now is or will soon be the richest man in Africa."

My contact already took a huge risk as the clan has imposed total secrecy, I cannot ask more at this time. As you know I have excellent connections in China, but they are not in the oil industry. It is always wise to obtain confirmation from another source so perhaps you or your blog readers could use their China contacts?

In the Spirit of Respect and Friendship,

Doc

Late Wednesday night, Chevron talked openly to the Houston Chronicle for the first time about a "major discovery" in Nigeria. Here is the Chronicles recap of the annual meeting:

Chevron plans record spending-"Major discoveries were made in the deep-water Gulf of Mexico, Venezuela, Trinidad and Tobago and Nigeria," he said

April 26, 2006, 8:58PM

By BILL HENSEL JR.
Copyright 2006 Houston Chronicle

After reporting a strong profit for 2005, Chevron Corp. said Wednesday it will spend record amounts on projects aimed at adding new gasoline production and oil and natural gas reserves in the coming years.

Peter Robertson, Chevron's vice chairman of the board, talked about what the big oil company will do with its profit, which totaled $14.1 billion for 2005.

"Our strong earnings and cash flows are enabling us to return cash to our stockholders and at the same time, fund a robust capital program, which in 2006 will be the highest annual spend in our history," Robertson said at the company's annual meeting, in downtown Houston.

The company also noted the feelings of consumers bearing the weight of rising energy prices.

With record earnings coming at a time of rising fuel prices, Chevron is aware of the need to try to maintain the dialogue with the public about prices, said Dave O'Reilly, the chairman and chief executive of the oil company, which is based in San Ramon, Calif.

"We certainly try, but there is so much emotion," O'Reilly said in response to a shareholder question. "It is very hard to cut through all that."

Geopolitical factors

Geopolitical factors are behind some of the rise in prices to around $72 per barrel, he said, adding that taxes and regulatory burdens in the U.S. also help push prices up.

"Everyone wants to point fingers, I'm afraid," O'Reilly said.

Chevron talked about its plans to bring more oil and natural gas to market. George Kirkland, executive vice president of upstream and gas, predicted production will grow more than 3 percent annually over the next five years.

In 2005, Chevron made 31 new discoveries, with a 58 percent success rate, according to Kirkland.

"Major discoveries were made in the deep-water Gulf of Mexico, Venezuela, Trinidad and Tobago and Nigeria," he said.

Chevron will also be spending to increase the efficiency of its refineries and will be bringing on several projects to add gasoline-making capacity this year, a Chevron statement quoted Mike Wirth, executive vice president in charge of refining and marketing, as saying.

Hurricanes a worry

But the company is casting a wary eye toward hurricane season because there hasn't been a full rebound from last year's storms, O'Reilly said. The company has beefed up its preparations.

"I think we're about as ready as we can be," he said. "Let's hope we don't have to go through what we did last year."

Despite having to battle hurricanes, Chevron also grew considerably bigger last year when it acquired Unocal. O'Reilly said the deal has strengthened Chevron's oil and gas positions in key regions of the world. The integration of those two companies is almost complete.

"The economics are turning out substantially better than forecast," O'Reilly said.

Oppenheimer analyst Fadel Gheit noted that while some observers last year thought that Chevron paid too much for Unocal, the $18 billion deal turned out to be a great acquisition. The company was smaller than Texaco, which Chevron acquired in 2001, and the integration was accomplished much more quickly, he said.

"Now, in hindsight, it was a steal," the analyst said. "It is a very nice fit."

The Unocal board approved the Chevron bid last year after rejecting a more lucrative offer from Chinese oil and gas company CNOOC. The offer by the Chinese triggered regulatory concerns and strong opposition from members of Congress because CNOOC is 70 percent owned by China's communist government.

Protests over Ecuador

At the meeting, Chevron faced protesters from another corner of the globe: South America. Emergildo Criollo, a leader of an indigenous tribe in Ecuador, speaking through an interpreter, alleged that his tribe is dying because of toxic contamination left from Texaco's former concession in the the Amazon rain forest.

O'Reilly countered that the blame for that lies with the Ecuadorean government and its national oil company, not Chevron.

Also on Wednesday, Chevron's board of directors declared a quarterly dividend of 52 cents per share, an increase of 15.5 percent. Chevron said it has increased its annual dividend payment for 19 straight years.

Exxon Gets The Shaft In Venezuela

In Hugo Chavez's Venezuela, oil giant Exxon is no longer king of the roost, and its assets are swiftly eroding as the company tries in vain to resist higher taxes and a socialist government bent on new ways of taxing multinationals who enjoy big profits from its rich oilfields.

The strain in Exxon's ties with the Chavez government were well known, but an article from the Dow Jones news agency this morning puts XOM's problems in a new and deeper perspective. The company has been drilling there since 1929, and Venezuela was the site of its first offshore rig, a wood and cement affair.

According to Dow Jones, Exxon is suffering from socialist creep across the board in its operations, is cutting back on staff and facilities, and may not drill any new wells this year in a key producing region.

The news has taken XOM shares down $0.47 this morning, while shares of Chevron, which also has a large stake in Venezuela, are still in the green.

Here is the story from Dow Jones' Peter Millard:


Update: Blogspot's servers were down much of the day, so efforts to post resulted in the posting of multiple stories:

Monday, April 24, 2006

Blogger.com will be down on April 24 2006 from 4 pm PDT to 4:45 pm PDT due to planned maintenance. We’re sorry about the one-two unplanned/planned outage punch today, but we need to do some database maintenance. You will still be able to view your blogs during the outage. Be assured that when Blogger.com comes back, it will be shinier and happier than ever.

Exxon finished trading Monday down $0.5771, and Chevron finished off $0.4778. Our apologies for the multiple posts!

Exxon Cuts Back In Venezuela Amid Fraying Ties
(Updates with comment from Exxon spokeswoman)
By Peter Millard
Of DOW JONES NEWSWIRES

CARACAS (Dow Jones)--In 1929 ExxonMobil Corp. (XOM) was one of the first companies to strike oil in the waters of Venezuela's Lake Maracaibo with a platform made of wood and cement, accelerating the country's initial oil boom and the development of offshore drilling technology elsewhere in the world.

Nearly 90 years later, the largest publicly traded company is reducing its administrative presence in Venezuela, which sits atop some of the world's biggest deposits. Project setbacks and tougher tax and contract terms may well be the reason why.

Exxon sold a stake in one of its two conventional oil fields last December to avoid the harsh terms of a contract overhaul. The state took majority stakes in all the 32 fields under the review and reimbursed the companies for lost value with $900 million in credits toward future investments, not cash.

The government took offense at Exxon's refusal to accept the new business model, and ousted the Irving, Texas-based firm in January from a $2 billion petrochemicals project. "The doors are not closed to Exxon, but relations have weakened due to everything that has happened," said Saul Ameliach, the head of the state petrochemicals firm Pequiven.

Venezuela swiftly found a new partner - it signed a deal this week for an even larger petrochemicals project with Brazil's Braskem S.A. (BAK).

Exxon, a protagonist in developing Venezuelan oil production and refining during the first part of the last century as Standard Oil of New Jersey, shows no signs of trying to win back lost ground.

One Caracas real estate agent says one of the floors Exxon rents in the posh San Ignacio mall in eastern Caracas will come on the market as early as June, and additional office space in December. According to a mall directory, Exxon rents five full floors in the mall's Kepler office tower.

According to another account from a person familiar with Exxon employees, the company is laying off some of its contracted staff after selling the oil field stake to its partner Repsol YPF (REP) in December and losing out on the petrochemicals deal early this year.

An executive at Colina & Tovar, a Caracas-based human resources firm said to have lost a contract with Exxon for around 15 employees this month, could not comment on the situation without authorization from Exxon.

Susan Reeves, an Exxon media advisor for its upstream division, said, "We are not making any significant staff changes in Caracas."

The trimming in staff and office space follows more than a year of strained ties.

Chavez, who accuses previous administrations of enriching international oil firms at the cost of the nation's poor majority, has hiked taxes and royalties, and taken majority stakes in fields private firms used to operate independently under contract.

Exxon, along with five other international oil majors, suffered a royalty hike on heavy crude production in 2004. Exxon was the only company to publicly challenge the move, arguing that Venezuela violated contract sanctity.

Since then, Exxon has slowed investments at Cerro Negro, the 120,000 barrel a day heavy crude project it operates and its most important asset in the country.

Exxon went ahead with planned maintenance at Cerro Negro's oil fields and an associated refinery in March, but executives at drilling firms say it doesn't plan to spud any new wells until 2007 at the earliest.

A report compiled by Franks International, a well casing company, showed Cerro Negro had no active drilling or workover rigs in December. Three other neighboring projects, also run by multinationals such as Chevron Corp. (CVX) and ConocoPhillips (COP), all had two to three rigs running in the same month.

Exxon has put on its best face publicly, saying it still plans on having a "long-term relationship" with Venezuela. The company's chief executive, Rex Tillerson, told investors in March that he is "very pleased" with the Cerro Negro venture, but said the business environment was too uncertain to launch new projects at this time.

Analysts say Exxon is also resisting Venezuela's contract maneuvers for fear that other oil-rich countries will take similar actions if it caves in to Chavez's demands.

Exxon may face tough decisions on the Cerro Negro project soon. Ramirez has asked Congress to hike the income tax on the four Orinoco projects to 50% from 34%, and a second royalty hike could also be in the offing. Some oil companies are already calculating 2006 tax payments according to the 50% rate.

In a worst-case scenario, some analysts speculate that PdVSA may try to take majority stakes in the projects.

The four projects, known as strategic associations, extract extra-heavy crude and convert it into lighter, sweeter crude known as syncrude at specialized refineries. As conventional oil reserves - the vast majority of which are locked up by state-owned companies inside and outside the Middle East - become increasingly difficult to tap, oil companies have focused on extra-heavy reserves located in the Orinoco and Canada's tar sands.

After investing billions in Cerro Negro, Exxon may try to hang on to it, but a new project in the area is unlikely. Exxon, which drilled the first Orinoco exploration well back in 1936, was not included in the list of firms invited to help quantify remaining reserves in the basin, which is viewed as the first step toward new projects in the area.

Uncertainty does not end in the Orinoco river basin.

This March, state oil firm Petroleos de Venezuela S.A. (PVZ.YY) told Exxon to shut down early production at the La Ceiba oil field it operates under an exploration contract signed in the late 1990s, the company's only remaining upstream oil asset apart from Cerro Negro.

PdVSA executives admit the field has abundant resources and could even connect with the giant Tomoporo reservoir under Lake Maracaibo, but the state firm has still refused to declare it commercial until it conducts more reservoir studies. Observers say Venezuela could be causing delays to strong arm Exxon into accepting a smaller stake in the field.

The original contract gives PdVSA the right to a 35% participation if commercial oil is found, but some industry observers expect it to push for at least a 51% stake in a field with excellent potential.


-By Peter Millard, Dow Jones Newswires; 58-212-564-1339;
peter.millard@dowjones.com;
END) Dow Jones Newswires
04-21-06 1633ET

Chevron Promotes Main Man In Nigeria, Jay Pryor; Company In JV to Build New Niger Delta Refinery

Chevron's top man in Nigeria has been promoted to a corporate job back home after four years that saw the first block of the Nigeria-Sao Tome and Principe Joint Development Zone awarded to the company and gave him a billion-barrel discovery to take back to Chevron headquarters in San Ramon, Calif., after his farewell party in Lagos Friday night.

At a dinner to honor him in Lagos this weekend, the Nigerian National Petroleum Company (NNPC) also announced that a new, private refinery is expected to end Nigeria's chronic shortage of kerosene and reduce unemployment in the Niger Delta, where it will be sited. Engineering work is to begin soon on the refinery, which is being built by joint venture partners Chevron, Shell, Total and ExxonMobil.

While oil company executives spoke on the record about Pryor's achievements, the big news that was likely the buzz of the party was apparently off the record.

In lauding Pryor as a visionary executive and oil industry veteran, the Guardian of Nigeria quoted several executive, but none mentioned the discovery in Block 1 that has a host of investors on tenterhooks awaiting formal word of the discovery at its Obo-1 well in the field's A1 propsect. OPEC President Edmund Daukoru has said may be larger than the one billion barrels of crude already reported in the Wall Street Journal and elsewhere.

Nonetheless, the manner in which the country said goodbye to Pryor suggests everyone in Nigeria was very pleased with the outcome of his work there.

Here is the Chevron press release on his new job, and below it is the story from the Guardian of Nigeria:

Jay Pryor Named Vice President of Business Development

SAN RAMON, Calif., March 20, 2006 -- Chevron Corporation (NYSE: CVX) has appointed Jay Pryor to the position of vice president for business development, reporting to Dave O'Reilly, chairman and chief executive officer. The appointment is effective May 1, 2006.

"Jay's successful track record with the company and well-rounded experience in the industry make him well suited to build upon the momentum we have established in this strategic role," O'Reilly said. "The company is committed to pursuing new legacy positions in high-growth regions of the world. Russia, the Middle East and North Africa are among the areas of focus for us."

Pryor, 48, has served for the past four years as managing director of the Nigeria/Mid-Africa strategic business unit, one of Chevron's largest international upstream operations. While in Nigeria, he successfully led Chevron's commercial efforts aimed at delivering future production growth, such as capturing several new offshore leases and overseeing many major capital projects, including the $5 billion Agbami offshore oil project, the Escravos gas-to-liquids project and the Olokola LNG project.

Pryor joined Chevron in 1979 and has held numerous positions within the company, including manager of petroleum engineering at Tengizchevroil (a Chevron joint-venture partnership) in Kazakhstan and managing director for Thailand, before moving to Lagos, Nigeria. Pryor holds a Bachelor of Science in petroleum engineering from Mississippi State University.

Pryor replaces Sam Laidlaw, whose departure was recently announced.

Chevron Corporation is one of the world's leading energy companies. With more than 53,000 employees, Chevron subsidiaries conduct business in approximately 180 countries around the world, producing and transporting crude oil and natural gas, and refining, marketing and distributing fuels and other energy products. Chevron is based in San Ramon, California. More information on Chevron is available at www.chevron.com.

Here is the Guardian's story:

NNPC, four firms to set up export refinery

AN export refinery to be located in the Niger Delta is to be built soon by the Nigerian National Petroleum Corporation (NNPC) and its Joint Venture partners.

Oil firms participating in the venture are Chevron Nigeria Limited, Shell Petroleum and Development Company (SPDC), Total and Exxon Mobil.

NNPC's Group Managing Director (GMD), Mr. Funsho Kupolokun dropped the hint in Abuja at the weekend during a dinner in honour of the out-going Managing Director of Chevron, Mr. Jny Pryor.

He said that feasibility studies on the facility to be named "Green Field Export Refinery" had already been carried out while the engineering work would soon start.

He said the refinery would be sited at the oil-rich Niger Delta for easy access to crude since all export terminals are located in the area there.

"The project will meet government's aspiration of reducing unemployment as well as reduce poverty to the barest minimum," Kupolokun said.

The News Agency of Nigeria (NAN) also quoted the NNPC Group General Manager, Public Affairs, Dr. Levi Ajuonuma as saying that an end to current scarcity of kerosene was in sight.

Ajuonuma said that 24 vessels loaded with the product were waiting at the port to berth.

The NNPC boss said that Chevron under the leadership of Pryor worked tirelessly with NNPC to realise the West African Gas Pipeline Project believed to be a veritable regional integration project.

He listed other national projects started during Pryor's tenure in partnership with the NNPC to include the 34,000 barrel per day (b/d) Escravos Gas to Liquid (EGTL), the 22 metric tonnes yearly OKLNG, the 34,000 b/d mini-refinery at Escravos as well as the 780 mega-watts (MW) Independent Power Project (IPP) at Ijede.

Kupolokun said that Pryor had an impressive outing in the country and that his feat would continue to impact positively on the nation's oil and gas industry.

He urged the new Chevron Managing Director Fred Nelson to build on the foundation laid by Pryor in order to add more value to the sector.

Ajuonuma said at the weekend the corporation would in the next few days flood the country with kerosene.

"We currently have 24 vessels loaded with various white products on the high sea waiting to berth," Ajuonuma said.

"I am optimistic that pump prices of kerosene will crash as soon as the product is pushed into the market," Ajuonuma said.

He said that the NNPC was complying with the presidential directive to make kerosene available and affordable to all Nigerians.

The image maker said the era of kerosene shortage would soon be a thing of the past given the commitment of Kupolokun to make the commodity available at all times.

Most stations in Abuja displayed N56 per litre of kerosene to be the cost of a litre of kerosene even though they do not have the product to retail.

Ajuonuma described it as artificial, saying that the NNPC had 25-day stock of petrol at Suleja depot.

Addax Deal Confirmed In Upstream For Double The $5 Million Reported Earlier

A deal between mystery minnow Overt Ventures and Addax Petroleum, ERHC Energy's operating partner in Block 4, and for Overt's 5 percent of the block has been confirmed by UpstreamOnline today with one major detail added: Overt is getting $10 million in cash, not $5 million as first reported.

The Joint Development Authority of the Nigeria-Sao Tome and Principe Joint Development Zone also gets a $5 million fee, as reported earlier, but the amount going to Overt is doubled.

The significance of the deal is that it places a cash value on acreage/equity in Block 4, and for the time being it appears to be twice as much as thought.

ERHC shares (OTC BB symbol: ERHE) responded sluggishly, if at all, falluing as much as $0.014 to $0.855 on tepid volume of 437,981.
The Upstrream article could be in error, yet the unreported Chevron find in Block 1 could have doubled the price before the deal was signed. Portions of Block 4 are believed to be directly south of the Block 1 find in Chevron's Obo-1 test well in a prospect designated A1.


Here is the Upstream article with a good mention of ERHC Energy:

Addax lifts its JDZ standing

By Upstream staff

Addax Petroleum has boosted its stake in the Joint Development Zone managed by Nigeria and Sao Tome&Principe in the Gulf of Guinea, writes Barry Morgan.
The Swiss explorer increased its interest in Block 4, where it recently secured operatorship through a partnership with Houston minnow ERHC Energy.

Last week, Addax acquired the 5% participating interest of Nigerian independent Overt Ventures, thereby raising its own stake to 38.3%.

Last year, Noble Energy walked away from the blocks, partly on the grounds that it could not secure sufficient equity to justify operatorship and because of unresolved question marks against local independent participants.

Addax will pay $10 million to Overt, with which it already had a technical partnership deal, and another $5 million to the Abuja-based Joint Development Authority to cover the administration fee and an additional signature bonus of $4.5 million.

21 April 2006 12:35 GMT | last updated: 21 April 2006 12:35 GMT

Afren Analysis Supports Billion-Barrel Claim For Block 1

An analysis conducted for Afren Corp., a minority partner in Block 1, bears out the reports that the block where ChevronTexaco has apparently already encountered oil could contain more than a billion barrels of oil.

Found by JDZ board moderator instructmba on the Internet, the analysis examines some of the high-risk issues in deepsea exploration but concludes the structures in Block 1 have a 56 percent chance of producing oil reservoirs as large as 1.1 billion barrels.

The report is at:

http://www.afren.com/pdf/AfrenCPR-Block1b.pdf

Why We're In Iraq...

UPDATE AND CORRECTION Regrettably, MSNBC and other news agencies now report that these attacks described by the Iraqi Ministry of State for National Security never occurred. It is not clear why the ministry invented the story.

Teachers beheaded in Baghdad in front of students
Wed Apr 19, 2006 8:16 AM ET

BAGHDAD (Reuters) - Separate groups of gunmen entered two primary schools in Baghdad on Wednesday and beheaded two teachers in front of their students, the Ministry of State for National Security said.

"Two terrorist groups beheaded two teachers in front of their students in the Amna and Shaheed Hamdi primary schools in Shaab district in Baghdad," a ministry statement said.

A ministry official said he believed the attacks were aimed at: "intimidating pupils and disrupting learning."

Oil Hits 70.88, An All-Time High

Oil hit an all-time record high price of $70.88 this morning, sending oil stocks sharply higher but generating shockwaves through the global economy that fears a slowdown due to rising interest rates and transportation costs.

Here is an MSNBC report posted earlier on the new I-Hub JDZ board:

Oil prices keep rising to new high
Crude futures near $71 a barrel amid Iran, Nigeria concerns

Updated: 10:27 a.m. ET April 18, 2006

LONDON - Oil prices reached a new high of $70.88 a barrel Tuesday as persistent concerns about Iran’s nuclear program and supply disruptions in Nigeria overshadowed a new report from OPEC forecasting weakening global demand.

“We have broken new ground today,” said Victor Shum, energy analyst with Purvin & Gertz in Singapore. “The market sentiment is bullish, with yesterday’s record closing, momentum has been built up to cause a wave of buying.”

Light, sweet crude for May delivery on the New York Mercantile Exchange surpassed the previous intraday record of $70.85 a barrel in European electronic trading before easing back to $70.75. That was still 35 cents higher than on Monday, when the contract settled at a record closing price of $70.40 a barrel.

The previous intraday high was set Aug. 30, shortly after Hurricane Katrina lashed at the U.S. Gulf Coast and wreaked havoc on the region’s oil industry.

In its latest monthly report, the Organization of Petroleum Exporting Countries on Tuesday revised its demand-growth forecast for 2006 to 1.42 million barrels a day, down from 1.46 million barrels per day in the previous report. The cartel estimates that global crude-oil demand will be slightly above 84.5 million barrels per day — about half a million barrels per day lower than the current Wall Street consensus.

OPEC expressed particular concern about the impact rising interest rates would have on consumer spending in the U.S., where gasoline demand grew at a slower rate in the first quarter and could “carry over into the second half of the year.”

Still, analysts said oil prices were likely to climb further as long as geopolitical risks in Iran and Nigeria posed threats to supply.

Crude oil production is only barely keeping up with rising global demand, leaving a slim margin for error if there is a prolonged supply interruption, experts say.

Traders are anxious that U.S.-led efforts to stop Iran, OPEC’s second-largest member, from pursuing a suspected nuclear weapons program would lead to a disruption in Persian Gulf supplies.

And in Nigeria, militant attacks have led to the shutdown of crude oil production. Platts estimates Nigeria’s output fell by 220,000 barrels per day in March, compared with February.

Also underpinning high oil prices is booming demand in emerging economies such as China and India.

“The market sentiment now is much more nervous,” said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo. “Things haven’t changed so much but as we approach the summer driving season we’ll need more crude to make gasoline and we know also that U.S. gasoline production has its limitations because of the tight refining capacity.”

In London, Brent crude for June delivery at the ICE Futures exchange also hit an all-time high of $72.20 a barrel, before easing back to $71.91 — a 45 cent increase from Monday’s close.

Gasoline futures Tuesday rose 0.63 cents to $2.17600 a gallon while heating oil prices gained 0.11 cents to $2.0240 a gallon. Natural gas futures rose 25.3 cents to $7.830 per 1,000 cubic feet.

http://www.msnbc.msn.com/id/5612507/

NY Times Warns Obasanjo On Niger Oil Wealth

In a hard-hitting editorial that does not spare the Niger Delta rebels who have attacked oil fascilities and killed or kidnapped innocent workers there, the New York Times today hints that Al-Qaeda may have a role in the attacks but warns the Federal Government of Nigeria that corruption and incompetence must be overcome to share wealth from oil with the desperately poor and squalid communities of the oil-producing heart of Nigeria's economic engine.

Clearly, wholesale theft of oil wealth has long been commonplace in Nigeria, and ending it should be a central goal of Obasanjo's third term - if voters grant him one. One approach that might work both in the Niger Delta and Sao Tome and Principe is to set up an apparatus for direct distribution of oil wealth to individuals, such as the State of Alaska does each year. While that solution is far more workable for Sao Tome than for the Niger Delta, it represents a way to make a clean break with the current corrupted, unfair system that steals the wealth before it reaches communitie4s and families that genuinely need and deserve it.

Here is the Times editorial:

Blood and oil in Nigeria

The New York Times
MONDAY, APRIL 17, 2006

Just as things seemed to be calming down in the delta region of Nigeria after a spate of kidnappings and insurgent attacks, the militant group calling itself the Movement for the Emancipation of the Niger Delta - MEND - announced last week to all who would listen that it was planning new violence against oil facilities in the region. Apparently unconcerned about tipping its hand to the authorities, MEND even gave a date for the start of its new campaign: April 25.

The guerrillas could not have hoped for a better reaction. Crude oil prices immediately jumped on the news, hitting $70 a barrel, as new fears about a supply squeeze hit the global oil market. Adding to the concern is that the latest message, sent to various news organizations, seems a lot angrier and more violent than previous missives. The references to endless buckets of blood sounded more like an Al Qaeda rant than a threat from oil-market saboteurs.

This really should serve notice to Olusegun Obasanjo, president of Africa's most populous country, Nigeria. MEND's tactics - kidnapping oil workers, attacking facilities, killing government soldiers - are despicable, and deserve international condemnation. But the demand for more local control over oil wealth cannot be dismissed just because of its source.

Ever since Royal Dutch Shell discovered oil in the Niger Delta back in 1956, revenue from oil wells has gone to line the pockets of Nigeria's elite: military dictators and corrupt federal and local government officials. Very little has gone to help the impoverished communities in the delta, which remain among the poorest in the world. Environment degradation, caused by oil slicks and gas flares, has gone untreated.

Under Nigerian law, oil revenues go to the federal government, which then passes on a percentage to the states. In 2004, for instance, the 36 Nigerian states received $6.2 billion. Supposedly, about one-third of that went to the four major oil-producing states. But thanks to theft, corruption and mismanagement, on both the federal and state levels, very little of that money reached the local communities.

Traveling through the delta region, it is difficult to comprehend that this is actually an area wealthy in natural resources. Despite generating hundreds of billions of dollars in revenue since oil was discovered, the Niger Delta is one of the poorest and least developed parts of the country.

It is time for Nigeria's government to begin taking into account the plight of the people who live around the oil wells that have sustained the country for so long.

Meridian, Others Sign On To New JDZ I-Hub Board

The new but well-regarded poster instructmba ha started a new Investor's Hub board for the discussion of any and all companies doing business in the Nigeria-Sao Tome and Pirncipe Joint Development Zone, and well-known posters like Meridian, claudealain, jdubs, ajaxxx_99, texasspeculator and Sangamon Kid - not to mention yours truly, jouster - have all signed on.

Dissatisfaction with the old I-Hub board run by Texas mega-shareholder Phil Nugent's accountant, Norma Reynolds (who uses cchr and other aliases), and particularly her policy of banning posters and deleting posts that are relevant but possibly negative about ERHE, has spurred several efforts to replace her board, but only this new one has caught on.

The formal name of the board is JDZ Nigeria-Sao Tome e Principe and the URL is:

http://www.investorshub.com/boards/board.asp?board_id=5564

Free, fair and open discussion of ERHC Energy and the companies it interacts with in the JDZ and Sao Tome and Nigeria EEZs can only help investors, and although we got off on the wrong foot with instructmba initially, we like his style and feel good about the prospects of the new board.

Good luck, amigo!

8 Die, Dozens Wounded In Tel Aviv Suicide Bombing

Ih the first suicide bombing since Hamas took control of the Palestinian Authority, at least 8 persons are dead and dozens are wounded after a suicide bomber walked into a restaurant in the former central bus station in Tel Aviv and blew himself up this morning.

A Hamas spokesman claimed the bombing was "an act of self-defense" in response to Israeli aggression.

The bombing was reportedly condemned by PA President Mahmoud Abbas, however.

UK's BG Group Eyes Role In JDZ; PSCs For Blocks 5 And 6 To Be Completed, Upstream Says

An article in UpstreamOnline yesterday passed beneath our radar, but the acquisitive slant of the BG Group bears on ERHC Energy's holdings in Blocks 2 through 6, we believe.

Here is the article:

UK company aims for acreage in jointly held area and off Nigeria
BG shifts up gear on Africa targets

By Upstream staff

The UK's BG Group is targeting acreage in the joint development zone managed by Nigeria and Sao Tome, along with other blocks in the Nigerian Exclusive Economic Zone.

BG Nigeria project manager John Field would not be drawn on the move but simply acknowledged the company is "interested in all opportunities in the subregion".

JDZ blocks 5 and 6 will not be offered in a subsequent round but will signed up hopefully before the end of May, according to Lagos-based Joint Development Authority officials.

Signature bonuses for the two blocks will reach $37 million and $45 million respectively and the production sharing contracts will be signed before the end of May, officials claimed. BG is targeting Block 5, in which 75% equity was provisionally awarded to private Iranian consortium ICC-OEOC.

Houston-based ERHC Energy has the right to 15% of the block but must pay the full share of the signature bonus on it and on Block 6. That differs from other blocks where ERHC secured a bonus waiver alongside preferential rights negotiated under the bilateral accord which established the JDZ in 2002.

BG would have to acquire a 51% majority stake to secure Block 5 operatorship. Additional data will be required for the block, probably 3D seismic, in addition to the 2D seismic coverage undertaken by WesternGeco several years ago.

As part of its Nigerian expansion plans, BG has already signed up to participate in the OKLNG scheme in Ondo State along with Chevron, Shell and the Nigerian National Petroleum Corporation .

A project development agreement was signed in February and front-end engineering and design work on the four-train 22 million-tonnes-per-annum project is getting started.

The company has also signed a memorandum of understanding to buy gas from the proposed Brass LNG project, although its principal focus for securing upstream positions remains in the western delta.

Offshore, BG hopes to move swiftly on its freshly acquired OPL-332 plot in which it holds an operating stake of 45%.

Existing 2D seismic for the block has identified some leads but an additional 3D seismic shoot is planned for the fourth quarter.

BG is looking at the market for seismic acquisition and will probably go out to tender as soon as its in-house programme to re-interpret existing 2D is completed. There is one commitment well in the first exploration period.

OPL-332 has been described as "a strategic foothold" in Nigeria.

12 April 2006 23:02 GMT | last updated: 13 April 2006 08:50 GMT

Norma Rae, Er, Reynolds, Censors Meridian's Posts

Norma Reynolds, the I-Hub moderator known as cchr who is ERHC investor Phil Nugent's accountant - a job once held by ERHC non-spokesman John Coleman - has begun censoring all or nearly all of the posts by Meridian, the tipster who welcomed and lionized on her board just weeks ago.


The communist-style censorship wiped out all of his recent posts, board members say, and many of them have protested vigorously.

The Investor's Hub manager known as Matt has repeatedly said he frowns on excessive deletion of opinion posts, but has not dared to mess with his most successful board.

We wonder if Norma Reynold's newfound sensitivity doesn't have some connection to the news articles posted on the Raging Bull ERHC Energy message board today concerning ERHC partners Phil Nugent and Noreen Wilson, who are now associated by extension with an apparent swindler named Kent W. aka William Kent Trumble of Fort Mill, Pa. Both were tied to another convicted stock swindler who was also their attorney, lawyer Donald Mintmire of West Palm Beach, in a story in Barron's last year.

Reynolds' last caper was the smut-bombing of ERHC On The Move, according to our poster Doc who said she sent thousands of obscene messages to this board's comments section at the behest of Nugent, who was apparently offended by our discussion of his investment ties with GEECF, which filed for bankruptcy last May.

update: Shortly after our post appeared here, she allowed Meridian to start posting again and left this angry message:

THIS IS A ERHE BOARD! STAY ON TOPIC TO AVOID DELETIONS!

Whatever you say, Captain Queeg...

Addax Buys Overt Ventures 5% State In Block 4 for $10 Million, Lending A Boost To ERHC Stock

Oilphant's promise that "bigger news is coming" came true today when UpstreamOnline revealed that Addax Petroleum, our consortium partner in Blocks 2, 3 and 4 of the Nigeria-Sao Tiome and Principe Joint Development Zone, bought the rights to a 5 percent stake held by Nigerian independent Overt Ventures for a $10 million payment divided between the company and the Joint Development Authority.

The great thing about the deal is that by extension, it raises the value of ERHC's stake to a definable number. As in real estate, no one knows what a piece of property is worth until it is sold on the open market.

Here is the brief UpstreamOnline story, which has helped push ERHC Energy shares (OTC BB symbol: ERHE) up 3.29 percent this morning. At 1:10pm ET, ERHE shares were priced at $0.941 x $0.945 with the last at $0.95, the high of the day, on 1,677,429 shares of volume:

Addax boosts Block 4 stake

By Upstream staff

Addax Petroleum has boosted its interest in Block 4 of the Nigeria/Sao Tome Joint Development Zone (JDZ).

Addax said today it had acquired the 5% participating interest held by Overt Ventures, increasing its stake from 33.3% to 38.3%.

Addax will pay $10 million to Overt for the 5% interest plus $5 million to the Nigeria/Sao Tome & Principe Joint Development Authority, comprised of a $4.5 million signature bonus and $500,000 administration fee.

Addax president and chief executive Jean Claude Gandur said: "We believe that the JDZ offers world-class exploration potential. This acquisition follows our strategy of investing in the JDZ as a core exploration area for Addax."

Chevron 'Fesses Up: It Completed Block 1 Well A Month Ago

A press release from Chevron has revealed what the world's press revealed weeks ago.

Chevron has completed drilling its Obo-1 Well in Block 1 of the Nigeria-Sao Tome and Principe Joint Development Zone and is evaluating the results.

The news, if it may be called that, indicates that Chevron is going to proceed on the public relations front very, very slowly. So far, it has been content to leak the news that it released today to media outlets at least a month ahead of time.

The news seemed to have little impact on share price; the stock closed regular trading down $0.0055 at $0.8945, but two blocks of 50,000 shares each traded two minutes after the session at $0.885, down a cent and a half.

ERHC On The Move reported the results from this well - "Big Oil," we said - on Feb. 14, about 48 days after drilling started in December.

Here is the formal press release:

Exploratory Well Completed On Nigeria, Sao Tome JDZ Block

LAGOS (Dow Jones)--Drilling of the first exploration well in the Nigeria-Sao Tome and Principe Joint Development Zone's Block 1 has been completed, Chevron Corp. (CVX), operator of the block, announced Tuesday.

A statement by Chevron said the exploratory drilling was completed March 15, 2006. It said the Obo-1 well is located in 1,720 meters of water, while the drilling operation was completed in 63 days.

Other interest owners of the block are Esso Exploration and Production Nigeria-Sao Tome (One) Ltd., an unit of ExxonMobil Corp. (XOM), and Dangote Energy Equity Resources.

The statement said the results from the drilling of the Obo-1 well are currently under review by Chevron and its partners to determine the next steps in the group's exploration program.

The block is approximately 300 kilometers north of the city of Sao Tome and approximately 200 kilometers from the city of Port Harcourt in Nigeria.

Chevron JDZ Ltd. has a 51% equity share in the block while Esso Exploration and Production Nigeria-Sao Tome, and Dangote have 40% and 9% equity,
respectively.

-By Vincent Nwanma, Dow Jones Newswires, +234 1 585 0849; vinwanma@beta.linkserve.com

(END) Dow Jones Newswires

08:13 041106

Hard on the heels of this free non-news came the same non-news from UpstreamOnline, for $750 a year:

Chevron keeps mum over Obo-1

By Upstream staff

US supermajor Chevron has finished drilling Obo-1 wildcat, in Block 1 of the joint development zone jointly administered by Nigeria and Sao Tome, but the results of the well are under review, the company said today.

Chevron did not reveal whether the probe, sunk in 1720 metres of water, hit oil, revealing only that the well was completed on 15 March after 63 days.

The results from the drilling of the Obo-1 well are currently under review by Chevron and its partners to determine the next steps in our exploration program," the company said in a statement.

The well is the first to be drilled in the highly prospective deep water area of the Gulf of Guinea.

Chevron has operates Block 1 with a 51% stake, ExxonMobil has 40%, with local partner Dangote Energy Equity Resources holding the remainder.

11 April 2006 11:08 GMT | last

In Move With Grave Consequences, Iran Says It's Joined World's 'Nuclear Club'

Iran said today it has successfully enriched uranium and joined the world's exclusive "nuclear club," a move with grave consequences for world peace.

Amid reports that the Bush Administration is considering varioous option for an attack against Iran's nuclear facilities - referred to today as a "holy place" by Iranian authorities making the announcement to a vast room full of cheering dignitaries in Tehran - and long-standing threats from Israel to destroy Iran's nuclear capacity as it once did by attacking them in the 1980's - the U.N. Security Council is also considering diplomatic approaches to avert an armed conflict.

Oilphant: VGhlcmUncyBiaWdnZXIgbmV3cyB0aGFuIHRoZSBvYm8gb25lIH Jlc3VsdHMgY29taW5n

That's the latest gobbledygook the mysterious poster oilphant has dropped on the IHub board, where most early responders have said it's so complex it's no fun - too tough for them.

The last one was simple Morse Code, and that got figured out pretty quickly.

I tried it for a while, and with a complex letter substitution and some indictive reasoning I came up with a statement to the effect that the JDA has adopted some new rules that are simply pretests to allow our share price to erupt and fly.


NEW RULES SIMPLY CONS SO THAT WE ERUPT AND FLY

Well, that's my take. Meanwhile, we go back to waiting for a press release from Chevron.

Update Mystery Solved! We got a straightforward decoding from a site that a poster sent us. The message:

There's bigger news than Obo-1 coming

We can only hope it's so. ERHC Energy did climb a cent today before falling back to yesterday's close of $0.90, leaving us unchanged at 2:09pm ET.

ERHC Rising

"I'm baffled how a news lid could be kept so tight on such a Monster find," wrote a well-known poster called The Dane around 10am ET this morning on Investor's Hub.

He was serious, or at least pretended to be.

But how much of a secret can Chevron's discovery be if it was reported in the Wall Street Journal, celebrated publicly by OPEC President Dr. Edmund Daukoru, and reported in every oil industry publication from UpstreamOnline to RigZone - not to mention a host of news agencies including Agence France-Presse, the Portuguese news agency Lusa and Reuters?

We'd say it's no secret at all. We'd say that waiting for Chevron's official press release is a pretext; having been told by all and sundry since the find was first revealed here on Feb. 14, there are few in the investing world who don't know of developments in Block 1 of the Nigeria-Sao Tome and Principe Joint Development Zone.

What The Dane really meant to say is, why hasn't ERHC Energy's share price gone up more since the world learned of the discovery?

That is a harder question to answer. According to our sources, the Offor clan controls somewhere between 500 million and 525 million of ERHC's outstanding shares, and prefer to keep it in a lower range where the percentage of gains is consistently higher than can be achieved at a higher share price. Better a stock go up and down 12 percent every few weeks or months, from $0.70 to $0.80, and that you be able to buy plenty at those prices, than that it go from $1.50 to $1.60, or 6 percent, when you can't afford to buy it back in such great quantities.

What's the difference if you make 10 cents a share on 100,000 shares that cost you $0.70, or $70,000, or 10 cents a share on 100,000 shares that cost you $150,000?

Well, you make $10,000 on the first and $10,000 on the second, too - but the second costs you twice as much to play. If I had enough stock to control the game, I'd rather make $10,000 on my $70,000 investment, not my $150,000 one.

So don't expect too much price action, despite the huge gains companies like our reluctant JOA partner in Block 3, Anadarko, is enjoying. APC is up $3.80 today, while we struggle to stay even at $0.905.

VP Asks Obasanjo To Resign

The Vice President of Nigeria has tugged at the fabric that holds Nigeria's fragile federal government together, urging President Olusegun Obasanjo to resign, the BBC reports this morning.

The call comes a short time after Obasanjo's eldest son said he was misquoted by a newpaperman when he derided the activities of Vice President Atiku Abubakar.

For his part, the Vice President said Obasanjo had played fast and loose with the possibility of seeking a third term, which Obasanjo says would depend on whether or not the 1991 Nigerian constitution is amended to allow it. Currently, he is limited to two terms, and as in American politics, the Vice President is always considered a front-runner for the presidency.

While many Western leaders have publicly and privately indicated displeasure with Obasanjo's weighing of a third-term bid, ERHC On The Move has opined that Nigeria needs a strong leader with a strong anti-corruption message, and none of the potential candidates for the presidency seem to fit that bill well. Most have aggressivekly fought implementation of the anti-corruption campaign.

Here is the story:

Obasanjo should resign, VP says

Vice-President Atiku Abubakar has helped Obasanjo win two elections.

The row between Nigeria's leaders has intensified, with the vice-president urging President Olusegun Obasanjo to resign "for breaking the constitution".
Vice-President Atiku Abubakar opposes moves to let Mr Obasanjo seek a third term in office.

His comments come after he was told to step down by Mr Obasanjo's spokesman.

Mr Obasanjo has not publicly said whether he wants to remain in office but both men are believed to want to contest elections due next year.

They have been president and vice-president since the end of military rule in 1999.

'Subversive'

Mr Obasanjo's supporters have been campaigning for the constitution to be changed, in the face of vigorous opposition from various groups.

Hostility between Mr Obasanjo and his deputy has been brewing beneath the surface for some time, fuelled by political ambition, but has now come into the open, the BBC's Alex Last reports from Abuja.

Mr Obasanjo's second term in office ends next year.

"The call for resignation should be directed at the president... for pursuing an agenda that is subversive of the constitution, and the will of the majority of Nigerians," said the statement signed by Mr Abubakar's spokesman.

"For the avoidance of doubt, the vice president believes tenure elongation is morally wrong and a breach of the constitution, which he took the oath to defend," it said.

Presidential spokesman Femi Fani-Kayode replied that Mr Obasanjo had not said he wanted to seek a third term and so had not broken the constitution.

Mr Fani-Kayode had earlier said that if Mr Abubakar was unhappy in government, he should do the right thing and step down.

Security agents

Mr Abubakar on Wednesday night publicly declared his position for the first time, attending a meeting of senior figures opposed to changing the constitution.

He said he was prepared to take this stand because anything the government did to him could not be worse than his last three years in office.

Former military leader Muhammadu Buhari, who lost the 2003 elections to Mr Obasanjo, attended the meeting, along with MPs and both serving and former state governors.

State security agents said the group could not hold the talks at the Abuja Sheraton hotel because they had not sought police permission.

Instead, they moved to a government office.

Disloyalty

The issue has divided the ruling People's Democratic Party and Nigerian public opinion.

Relations between the president and his vice-president have been strained since last August, when President Obasanjo publicly accused his deputy of disloyalty.

On Wednesday Mr Obasanjo's spokesman told the BBC that the president would consider whether or not to stand if the constitution was changed.

The National Assembly is due to consider more than 100 proposed constitutional amendments, including whether to extend the limit on a president's term in office from two to three terms.

Opponents of the constitutional change argue that the presidency needs to rotate among people from different regions and ethnic groups.

Mr Obasanjo is a Christian from the south-west while Mr Abubakar is a Muslim from the north.

Recently, a majority of Nigeria's state governors agreed that a constitutional review was necessary within the life of the current administration.

Blocks 7, 8 And 9 To Be Re-Bid, Sao Tome Oil Chief Says

Both the Portuguese news agency Lusa and the French agency Agence France-Presse are reporting this afternoon that the last three remaining blocks of the Nigeria-Sao Tome and Principe Joint Development Zone have been withdrawn from bidding by the Joint Development Authority and may no be re-bid for another "six or seven years."

The news actually concludes the Nigeria-SRSTP Licensing Rounds that have caused huge amounts of controversy and dissension but were eventually resolved to most parties' satisfaction.

What may be the most important outcome of the announcement is that the Sao Tome Exclusive Economic Zone now comes up for licensing next year, the ANP chief said. ERHC Energy has substantial rights there, although there appear to be legal issues facing the company before its exctensive equity can be awarded. Those revolve around the terms of contracts with third parties, including a South African company called Procura, that existed before the Joint Development Zone was created.

Here is the report, which does not reference any source on the other side of the equation, in Nigeria:

07-04-2006 12:51:00. Fonte LUSA. Notícia SIR-7889800
Temas:

Sao Tome: Last three JDZ oil blocks withdrawn from auction - ANP chief

Sao Tome, April 7 (Lusa) - Sao Tome and Principe and Nigeria have withdrawn from auction the last three of nine oil exploration blocks in their Joint Development Zone (JDZ) due to lack of interest by potential bidders, the head of islands' National Petroleum Agency (ANP) said Friday.

ANP director Luís dos Prazeres told Lusa the bilateral decision was taken because JDZ blocks 7, 8 and 9 were located in "very deep waters" and would require great exploration costs.

"For the moment, the auction process of JDZ blocks is concluded", dos Prazeres said, adding, however, that the three remaining blocks could be looked at again "in six or seven years" after the start of operations in the six JDZ blocks already awarded.
Of the six blocks awarded in 2004 and 2005, the ANP director said production sharing contracts had yet to be signed for blocks 5 and six but that that process should be concluded "within two or three months".

Dos Prazeres, in his interview with Lusa, also said that Sao Tome could launch tenders for oil exploration in its Exclusive Economic Zone in the Gulf of Guinea by the middle of next year.

That process, he said, was delayed because of the need to "prepare a new legal framework", as current legislation, approved in 2000, was "no longer appropriate".
The government, he added, was already at work drafting new legislation for the EEZ, covering issues such as local content, customs duties and foreign exchange matters.

He said the legislative package could be approved by parliament by the end of this year and that "some activity could possibly take place in the EEZ in the middle of 2007".

Dos Prazeres also said that the STP government continued to "desire" the creation of a four-party Lusophone oil consortium with Portugal, Brazil and Angola to operate in Sao Tome's waters.

The consortium idea was first launched by President Fradique de Menezes during a visit to Brazil last year, but, according to dos Prazeres, progress has been stymied by past delays in the JDZ awards process.

VM/SAS.
Lusa

And here is another report from Agence France-Pressein Today Online, based on the first Lusa story:

Business // Weekend, April 8, 2006

Nigeria and Sao Tome and Principe have withdrawn from auction the last three of nine offshore oil exploration blocks found in an area shared by both nations, due to a lack of interest by oil firms, a senior Sao Tome official said.

The head of the tiny island state's National Petroleum Agency, Luis dos Prazeres, blamed the lack of market interest in the three blocks on the fact that they are located in deep waters where it is more difficult and expensive to prospect for oil.

The three blocks will probably go up for auction again in six or seven years when exploration is already under way in the six other blocks in the two nation's Joint Development Zone (JDZ), he told the Lusa news agency.

"For now the auction process in the joint area is complete," he said.

Under the terms of a 2001 agreement that established the JDZ, Nigeria is entitled to 60 percent of all oil and gas revenues from the formerly disputed waters while Sao Tome, a former Portuguese colony, gets 40 percent.

Dos Prazeres said Sao Tome plans to launch tenders for offshore oil exploration in its Exclusive Economic Zone by the middle of next year after parliament approves new legislation regulating activity in the area.

The government is already at work on legislation covering environmental issues, customs duties and foreign exchange matters which could be approved by parliament by the end of this year, he added.

Huge oil deposits detected in the waters off Sao Tome since 1995 have stirred international interest but so far the tiny archipelago of less 200,000 people has yet to feel the results of an expected oil boom.

Some studies suggest the islands, which gained independence from Portugal in 1975, sit on between six and 11 billion barrels of crude oil.

In January a consortium comprising ChevronTexaco, Exxon-Mobil and Nigerian concern Dangote Equity Energy Resources began drilling the first well in the JDZ, situated some 200 kilometres (120 miles) south of the oil-rich Niger Delta.

.The well, being drilled in deep waters in Block One of the JDZ, is seen as a crucial first indicator of whether the area does contain large and potentially profitable oil and gas reserves. — AFP

Strong Numbers Today

ERHC On The Move
Site Summary

VISITS

Total 153,706
Average Per Day 1,336
Average Visit Length 1:50
Last Hour 53
Today 1,636
This Week 9,354

PAGE VIEWS

Total 214,247
Average Per Day 1,733
Average Per Visit 1.3
Last Hour 73
Today 2,198
This Week 12,130

Posted at 8:53pm 4/7/06

Three Sources Say ERHE Buy-In Is Underway; Meridian Post Renews Interest

ERHC On The Move has learned from three separate sources that a buy-in of ERHC Energy shares is currently underway, and that at least two major oil companies have approached ERHC with offers for substantial equity in the company, and two of those sources say that at leat one company that is buying ERHC Energy shares is the Chinese oil giant Sinopec, our partner in Block 2 and the seventh-largest oil company in the world.

One source, the ERHC On The Move poster known only as "Doc," said today:

ERHC Energy *has* been approached by at least two majors that are interested in taking a stake in the company.

When I wrote to you over a month ago that what was being discovered in the Gulf of Guinea's JDZ was a mammoth field - a term that so many people seem to use now - and you published this on your ERHE blog, you were shot down in flames and some very unkind words were used about me.

Out of the information I have since gathered from multiple and excellent sources I can confirm that what I wrote on March 6 was correct. In fact, it is my belief that 10 years from now the JDZ will be regarded as one of the top 5 oil-producing areas in the world. There seems to be very large quantities of gas as well.

Today's share price to some degree reflects at least one of the rumors, from the knowledgeable poster "oilphant," who posted a message in Morse code decoded as simply, "Sinopec buying shares."

The other source with respect to Sinopec cannot be disclosed.


And this just in from Meridian, the controversial poster on I-Hub. We publish it because it is consistent with Opec President Dr. Edmund Daukoru's comments published in UpstreamOnline yesterday:

Posted by: Meridian
In reply to: None Date:4/7/2006 3:42:54 PM
Post #of 42075

OBO WELL UPDATE. A MONSTER

Oil column is more than 3000 feet.

More than 10 producing horizons.

Don't know anything about the structure straddling other blocks.

The dimwit awlright posting on the I-Hub board claims the above was somehow a statement in my defense. While you can't convince an illiterate in writing, those who can read will recognize the positions above are ones taken by Doc, who is apparently concerned about his timeliness.

Just for the record, we were the first to reveal that "Big Oil" had been found in Block 1, and that information was quickly researched and covered by Jacinta Moran of Platt's. But it appeared here first on the morning of Feb. 14.

Like most illiterate dimwits, awlright rarely contributes anything but commentary, consistent with his empty-headed approach to life. Here is his post:

Posted by: alwright
In reply to: None Date:4/7/2006 5:42:23 PM
Post #of 42187

Poor Joe S...claims he has been vindicated. Claims he posted in early March that the CVX find was HUGE and that some posters trashed him!!! Fess up..WHO??? I'm sure nobody wanted to believe we would be rich soon :0)

Block 1 May Have More Than A Billion Barrels, Daukoru Says

Nigeria's oil minister and the current President of OPEC, Dr. Edmund Daukoru, told UpstreamOnline's veteran petroleum industry reporter Barry Morgan this week that the rumored discovery by ChevronTexaco in Block 1 of the Nigeria-Sao Tome and Principe Joint Development Zone may be larger than first thought - "more than a billion barrels," Daukoru said.

The report is self-explanatory, so here it is:

UPSTREAM JDZ bonus payments due soon

By Upstream staff

THE Joint Development Authority managing the Gulf of Guinea joint development zone between Nigeria and Sao Tome has indicated that all signature bonuses payable for production-sharing licences signed last month will be due by 14 April and that drilling on blocks 2, 3 and 4 should start before the end of the year, writes Barry Morgan.

Also, indications of a "possible billion-barrel find" in its debut wildcat on Block 1 by operator Chevron were cautiously backed by Nigerian Minister of State for Petroleum Resources Edmund Daukoru in Abuja this week.

"Possibly more than 1 billion and more than originally thought. Obo-1 is not a disappointment, though I am waiting to hear the final result," he said.

Interest Is Slowing

VISITS

Total 152,068
Average Per Day 1,382
Average Visit Length 1:54
Last Hour 57
Today 1,341
This Week 9,675

PAGE VIEWS

Total 212,040
Average Per Day 1,805
Average Per Visit 1.3
Last Hour 71
Today 1,718
This Week 12,636

Like Sao Tome, Belize Oil Discovery Brings Hope

In an article (registration required) very much like the one that introduced the world to ERHC Energy - then known as Environmental Remediation Holding Corp. - that appears in the Los Angeles Times this morning, the promise of a different and better future for Belize has been conferred upon that tiny Central American nation of 291,000 by a Mennonite farmer's Jed Clampett-style discovery of oil on his farm.

The parallels are intriguing: the article by Maria Dickerson appears in the Times daily feature, Column One, just as the article by Ken Silverstein on May 18, 2003 did; the country involved is barely a blip in the fast-paced news of the world; the dire poverty there has desperately sought a cure, and now may have found one through a small, private Irish and American firm named Belize Natural Energy.

And as in Sao Tome, where crude commonly bubbled to the surface in famers' fields, drillers for a long time had unsuccessfully sought oil there, with Denver billionaire Philip Anschutz, Chevron and the former Texaco drilling some 50 dry holes over 55 years before the farmer, one of a 1,700-member self-supporting community there, struck oil with a pick and shovel. Now there's talk of "Texans in Stetsons" rushing into the country to lay their money down for prospective oilfields. It's Phil Nugent, Geoffrey Tirman and Sam Bass all over again.

Since then, a company backed by 80 Irish investors has hit oil, so sweet and light some farmers pour it unrefined into their tractors, three times in three tries. The company believes there may be a 75 million-barrel field beneath Spanish Lookout, the Mennonite community in the west-central Belizean jungle. The community is trying to hold on its rights. Critics are charging that the company's 7.5 percent royalties plus 5 percent in fees is too low (ERHC Energy will eventually pay an 80 percent royalty to Nigeria and Sao Tome).

As with ERHC Energy, there is quite a cast of characters associated with the company, including man convicted of bankruptcy fraud who represents the Mennonites, and an engineer and oilman named Mike Usher, a prominent Belizean who never gave up on the idea of finding oil that eluded him until his death; and then there's a self-help guru in Ireland who says he senses the "energy" of oil before he's anywhere near it.

All in ll, it's a great story, and perhaps one day, a great new investment:

COLUMN ONE
Rumble in the Jungle Over Oil

In Belize, wildcatters, the government and the local Mennonites -- advised by an ex-con -- all seek a share of newly discovered black gold.

By Marla Dickerson, Times Staff Writer
April 5, 2006

SPANISH LOOKOUT, Belize — This tiny country struck oil in much the same way Jed Clampett stumbled on a gusher in the Ozarks.

A few years ago, a Mennonite farmer dug a shallow well in this bucolic hamlet and up bubbled crude.

ADVERTISEMENT
"It was just like the Beverly Hillbillies," said government petroleum inspector Andre Cho, who advertised the incident to woo private investors.

The cast of characters linked to the find is as colorful as anything on television. They include speculators motivated by an Irish self-help guru, Mennonites who have hired an ex-con to extract a better deal for petroleum on their land and a seismic engineer with an unshakable belief that his impoverished nation was brimming with oil.

Belize joined the ranks of the world's oil exporters in January, when its first shipload of crude hit the market. Production is a mere 3,000 barrels a day, but some Belizeans are dreaming of a payday to rival that of the Clampetts'.

And like the sitcom millionaires, people in this Central American nation of 280,000 are getting a glimpse of the opportunities — and opportunists — that accompany $60-a-barrel oil.

Local entrepreneurs are purchasing tanker trucks. Politicians are salivating over a potential windfall. Environmentalists are bracing for the worst.

Across Belize, rumors abound of oilmen in Stetsons rushing to cash in.

"When you see Texans coming down here, you know that something is up," said Belize City bartender Robert Williams, tapping his blender with authority at a restaurant called the Smoky Mermaid.

Cho said wildcatters have been tantalized by the speed with which Belize Natural Energy — a small private firm backed mainly by American and Irish investors — last year found the first significant deposits of oil. In contrast to the heavy sulfur-laden stuff found in neighboring Guatemala and Mexico, Belizean crude is so sweet and light that some local farmers are putting it raw into their tractors.

The strike couldn't have come at a better time for Belize's debt-strapped government, which hopes to use oil wealth to reduce taxes and bolster social spending. Normally laid-back Belizeans took to the streets last year to protest a series of price hikes. Hefty taxes on imported gasoline have them paying nearly $5 a gallon at the pump.

Minister of Natural Resources John Briceno calculates that at current prices, the government's take from even modest oil production of around 60,000 barrels a day would cover the entire national budget.

Belize Natural Energy executives say they won't know the true size of the find until they do more testing, but one partner told a local newspaper last year that as much as 75 million barrels could be under a 4,000-acre parcel in Spanish Lookout.

"If we could produce even 20,000 barrels a day, you can imagine what we could do with that," Briceno said. "It could make a huge difference for our little country."

An Undying Belief

For half a century, oil drillers came to Belize hoping to hit the big one.

Denver billionaire Philip Anschutz spent millions of dollars chasing black gold in this Massachusetts-sized nation located southeast of Mexico's Yucatan Peninsula. So did Texaco, Chevron and others. Studies hinted at petroleum deposits lurking beneath the jungle floor. But drilling yielded 50 dry holes in as many years.

Thus Belize Natural Energy made history when it struck oil on its first attempt, just 15 miles from the spot where the farmer first found petroleum.

Key to the effort were two of the firm's partners: Northern Irish-born Susan Morrice, the company's president and a veteran geologist with two decades of experience in Belize; and the late Mike Usher, an engineer and member of a prominent Belizean family who never gave up on a dream that his nation could be an oil producer.

Usher's 89-year-old mother, Jane, who still works as general manager of a local credit union, recalls her son bringing rocks to Sunday dinner, insisting they were evidence that Belize was rich in petroleum.

He didn't live to see his dream fulfilled, dying in 2004 of what his mother said was a liver-related ailment. But she never doubted him.

"Every Sunday it was always the same. The oil thing. The oil thing," said the mother of 10, known to locals by the respectful title Miss Jane.

With financing from Morrice's husband, Colorado oil executive Alex Cranberg, and more than 80 Irish investors, the firm used seismic technology to map previously unexplored territory around Spanish Lookout. They found what they believed to be a sizable oil field under Mennonite pastureland.

The company's roughnecks hit oil three times in as many tries, naming the wells Mike Usher No. 1, Mike Usher No. 2 and Mike Usher No. 3.

Company director Sheila McCaffrey credits a secret weapon for the strikes. All the partners and most of the company's investors have gone through a course taught by Tony Quinn, an Irish-born "mind technology" consultant. Quinn's website promotes herbal supplements and a $23,000 two-week seminar in the Bahamas that promises to help participants shed negative thoughts.

Dressed in shorts and a T-shirt on a recent sunny day in Belize, McCaffrey acknowledged that the partners weren't typical oil executives. Driving a visitor toward the wells at Spanish Lookout, McCaffrey said she could actually feel the energy emanating from the site.

Such talk makes petroleum inspector Cho giggle. But he said he couldn't argue with the results.

"Hey, they found the oil," said Cho, a slight, bespectacled 29-year-old who sports a gold stud in one ear. "That's what counts."

Uncertain Future

Some Belizeans fear that coaxing the nation's long-hidden oil to the surface is equivalent to opening Pandora's box.

Belize boasts lush rain forests, delicate coral reefs, piercing blue skies and what it claims to be the world's only jaguar preserve.

Environmentalists are in disbelief that a country that has made eco-tourism a pillar of its economy is aggressively courting oil companies.

Because the nation lacks a refinery, pipelines or other basic petroleum infrastructure, the oil must be moved by tanker trucks along narrow, pitted roads to the docks in the southern city of Big Creek for export.

"We simply aren't prepared," said Godsman Ellis, president of the Belize Institute of Environmental Law and Policy, who says that spills and other disasters are inevitable.

The nation's Geology and Petroleum Department is scrambling to add more trained personnel, and Cho's office in a low-slung cinderblock building with a corrugated roof has become a hubbub of activity.

He said several independent firms that hold drilling rights were moving forward with projects. He has received at least half a dozen new inquiries as well.

Cho said the discovery has given the government greater bargaining power to demand a bigger share of oil revenue in new contracts. Some critics have grumbled that the government gave away the store in its deal with Belize Natural Energy, which pays a 7.5% royalty off the top to the government plus as much as 5% of revenue from production after transportation costs.

The government of neighboring Guatemala, for example, receives royalties of 20% and as much as 70% of the production revenue.

Briceno, the oil minister, said the low royalty and production revenue-sharing figures were necessary to entice oil drillers back to the country. He said that the nation would collect an additional 1% royalty to spend on the environment and social programs and that the contract contained a provision allowing the government to purchase a 10% stake in the firm.

But the Mennonite farmers on whose land the oil was discovered are wary.

Concerns about outsiders meddling in their affairs led the Christian group to flee Mexico 45 years ago for Belize, where they carved space for poultry and dairy farms out of 55,000 acres of jungle around Spanish Lookout. The community of about 1,700 people is virtually independent, funding its own schools, roads and other services.

But the oil find could alter that delicate balance. The federal government, which owns all mineral rights in Belize, has the power to force landowners to accept oil drilling on their property for a small share of the oil revenue.

Early negotiations among the Mennonites, the government and the oil company were cordial, said Erwin Thiessen, chairman of the community. But he said the Mennonites were now pushing for a better deal to compensate for increased traffic, possible environmental and health hazards and a potential disruption to their way of life.

"My biggest concern is how we will deal with this so our community will be protected, so we can continue living on as we have," he said.

Known as peace-loving and nonconfrontational, the Mennonites have hired an American, Jim Cavanaugh, to advise them. Cavanaugh, now a resident of Belize, served a few months in a federal detention center in Colorado for bankruptcy fraud in 1999. Federal authorities say that when he filed bankruptcy a decade earlier, he falsely stated that he had sold some Trakehner horses valued at $124,000 from his Colorado horse farm for $10,000. Among them: a horse named Belize.

The 75-year-old Cavanaugh now describes himself as a geologist and independent oil and gas consultant with extensive experience in petroleum lease negotiations. He said he was only trying to get a "fair and reasonable" settlement for the Mennonites.

"The profits there are going to be huge," Cavanaugh said of the oil reserves in Spanish Lookout.

Other Belizeans suspect that they too will be shortchanged. A block away from Belize's Geology and Petroleum Department in the capital Belmopan, on the crowded campus of United Evergreen Primary School, principal Pamela Neal said she lacked a single computer for her 765 students.

Neal said she would like to believe that the poor Creole, Maya and mestizo youngsters that make up her student body would benefit from any oil riches. But she said the experience of developing nations such as Nigeria, where multinationals and corrupt officials have pocketed most of the wealth, had her fearing the worst.

"We are between the devil and the deep blue sea," she said.