Thanks for bringing this to our attention 2...
I've messed with it for a little while and have come up with the following (not necessarily in the proper sequence). I may try again later today if I get the time.
SHORTLY after the 2001 elections in Sao Tome & Principe brought businessman Fradique Menezes to the presidency, the 200,000-strong population believed an oil bonanza would transform the fortunes of the archipelago, but the dream has failed to materialise.
Years of protracted policy debate culminated with World Bank-inspired revenue management legislation before any commercial drop of oil was discovered. Menezes’ political nemesis Manuel Pinto da Costa was returned to the top job in 2011, having previously run the country as a socialist dictatorship throughout the 1980s, ushering in a new alliance with Lusophone Angola, which has clear upstream ambitions in the archipelago. Early curiosity was shown by ExxonMobil, Noble Energy, Devon Energy and Pioneer Resources, but their interest rapidly receded with play-promoter ERHC Energy left scouring for alternative suitors, eventually roping in Chinese giant Sinopec.
The Nigeria-Sao Tome & Principe Joint Development Zone (JDZ) had been established in 2001 as an area of overlapping maritime boundary claims between the two states under a 45-year treaty, allowing Nigeria access to 60% of petroleum resources and revenue. The Joint Development Authority (JDA) reports to a Joint Ministerial Council but despite concerted hopes of early drilling success, the first probe failed to impress with Chevron’s 2006 Obo-1 wildcat logging multiple but non-commercial hydrocarbon payzones. Total then took over Chevron’s 45.9% operating stake and, with Sinopec subsidiary Addax Petroleum and Nigerian indigenous vehicle Dangote-EER, drilled another two wells in 2012, but it never released the results — leading industry observers to insinuate further disappointment. Obligations However, those partners have just secured a six-month extension, with a senior source within the Dangote-EER tie-up assuring Upstream that “some discoveries were made, which we are now evaluating”. Many smaller Nigerian vehicles, awarded minority stakes in the unexplored blocks from the JDZ, defaulted on their obligations and the JDA does not wish to see missing funds in the next exploration phase — and it needs drilling success to shore up confidence. Involved from the outset in the JDZ, BVI-registered Equator Exploration may be on the point of pulling out of Block 2 but its view is countered by the Nigerian explorer Oranto Petroleum, which decided this April to take on 100% of Block 5, restoring some optimism. Oranto will tender for both 2D and 3D seismic before the end of the year.
Credited with pioneering prospectivity in the JDZ, while retaining minority interests across the play, Houston-based ERHC Energy hopes recent changes in JDA leadership will galvanise activity after five wells drilled with operator-partner Sinopec without commercial discovery.Minister of Natural Resources Osvaldo de Abreu was appointed earlier this year and is the first to have oil industry experience — he is an ex-Petroleum Geo-Services Exploration business development manager. He is driving forward proposals to initiate a deepwater port in collaboration with Angola. Principe-born Luis Alberto dos Prazeres, Sao Tome’s first Minister of Natural Resources, was promoted from his role as chief executive of Sao Tome’s National Petroleum Agency to executive director for investment at the JDA, and his first act last month was to restart talks with partners to rekindle exploration. Sinopec operates Block 2, while Addax formally operates blocks 3 and 4, and traces of biogenic methane have been found in three
to deliver and partners agree that a raft of fresh incentives may be required to reposition the drillbit, notably by reducing upfront fees and waiving
is committed to drill and the minimum depth to which they must be drilled. Another issue is whether or not to converge operator obligations to sink a well or commit a specified volume of seismic. Increased flexibility in the PSC may shore up consortia plans to charter a drillship, which typically costs about $100 million per well — and this new determination to infuse greater flexibility into the PSCs finds resonance with Ntephe.“We’re all studying the data right now
by Oranto in tandem with 3D and 2D commitments in the JDZ. ERHC Energy has preferential rights to EEZ blocks 4 and 11 free of signature bonuses and us currently finalising the PSCs — “only one or two clauses, just semantic differences really, which we hope to resolve by early August”, says Ntephe.“It’s a frontier province and requires gravity magnetics, fresh seismic and repro but no commitment to drill in the first four-year period. The following two-year period requires one well and the drilling phase may be extended for two years,” he says. Equator Exploration has a similar deal for blocks 5 and 12, leaving EEZ blocks 1, 2, 6, 7, 8 and 13 formally unallocated. ERHC Energy has three experienced deep-water operators lined up as possible partners — “folk are trying to get in and negotiations are continuing,” says Ntephe. Since PGS carried out all the seismic, potential farm-in suitors have to purchase datasets from its London data room and two major operators have already licensed the packages.
Chinese interest Renewed focus upon Sao Tome & Principe’s Exclusive Economic Zone (EEZ) has attracted Chinese-Angolan joint venture SinoAngol to chase EEZ Block 2 outside of the long-planned licensing round. One official winner is Nigerian independent Oranto Petroleum, which landed EEZ Block 3 in May
to the PSCs. He has been in oil for a long time and is a good administrator,” says ERHC Energy chief executive Peter Ntephe. ERHC Energy retains a minority stake of 22% in Block 2, and holds 10% in Block 3 , 19.5% in Block 4, 15% in Block 5, 15% in Block 6 and 20% in Block 9. Exploration efforts to date have failed
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