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******Barry Morgan******Upstream****
New fish on hook for JDZ awards
The second licensing round in the Joint Development Zone (JDZ) administered in disputed waters in the Gulf of Guinea by Nigeria and Sao Tome&Principe is finally drawing to a close.
At stake are five deep-water licences blocks 2, 3, 4, 5 and 6 of varying prospectivity. It is understood all will be awarded before the end of this week.
The Joint Ministerial Council is constrained by bilateral treaty provision to conclude the round within a set period and this has long since expired, according to Nigerian officials. Abuja is keen to see the gridlock resolved.
Equity stakes in the three most attractive blocks have been agreed and some minor details are being finalised for the less popular blocks 5 and 6, but latest indications are that the two presidents Olusegun Obasanjo of Nigeria and Fradique de Menezes of Sao Tome are agreed on the main players.
Nigeria in particular is keen to see the operatorship of Block 2 go to US explorer Pioneer Natural Resources. Pioneer bid with Devon Energy and US minnow ERHC Energy, linked to Nigerian indie Chrome Energy, which also bid directly and already enjoyed preferential equity rights on this and several other blocks.
The Pioneer group as a whole will likely be awarded 70% of Block 2 with 10% going to Bermuda-registered Equator Exploration (EEL) recently listed on London's Alternative Investment Market which also enjoys entitlement to a share of licensing fees from JDZ seismic data sales under a joint operating agreement with Petroleum Geo-Services. Another 20% will be awarded to two unidentified Nigerian indies.
An operating stake of 50% in Block 3 will be awarded to Anadarko Petroleum, with ERHC landing 35% and EEL 10%. Spare equity on the block will go to a Nigerian indie.
Noble Energy, in partnership with ERHC, also fought hard for Block 4 where Noble has now convinced the Joint Development Authority that its drilling budget and clear commitment to three wells outplays Anadarko's one-well bid. The Noble/ERHC tie-up will likely be rewarded with a 70% stake, with Noble operating and a minimum of 20% awarded to local indies.
It is understood the PSCs will bear a strong resemblance to terms signed earlier this year for Block 1 with operator ExxonMobil, Chevron and Dangote-Energy Equity Resources. All players want to drill without delay and even the World Bank is understood to have advised Sao Tome that the above line-up was the best commercial deal.
Hardest to convince was Houston-based Patrice Trovoada, the son of former Sao Tomean President Miguel Trovoada and until last week Menezes' Special Adviser on Oil Affairs. Patrice Trovoada was ousted from office last week after pushing hard for EEL and its partner ONGC Videsh to operate Block 4, but to no avail.
Meanwhile, Sao Tome's Natural Resources Minister Arlindo Carvalho tendered his resignation this week, citing pressure over delays in concluding the round amid allegations of "irregularities" in negotiating awards.
Catch of the day:Nigeria and Sao Tome are set to reel in big exploration players on blocks to be awarded under the second JDZ licensing roundPhoto: ELIN HOYLAND
Here is a great post from Musing's from RB. It explains in latter paragraphs ERHC's earlier involvement in Sao Tome and how ERHC was of benefit to them. Hopefully this side of the story gets more attention going forward.
"RE national interests and stockholder rights. Couldn't disagree with you more, not in your supposition that what matters to any government are national, and perhaps political, interests but what is implicit in your comment that somehow national interests and stockholder rights are seperate and distinct choices. Any legal action by ERHE, and it would not be the world court because the parties have already agreed that it would be the law of Wales that would determine any dispute, would create chaos for STP and the JDZ. All companies would be on notice of any law suit brought by ERHE and companies who exploited blocks or portions of blocks that lawfully should have gone to ERHE, by virtue of their preferential rights, would be third party beneficiaries of a breach of treaty. This would mean, if ERHE were to establish its rights, that third party profits of the competitors who benefited by the violation or ERHC's rights could be attached by ERHE. And these third party companies could not, in their own countries, claim lack of jurisdiction. Companies wouldn't go near a project with this economic dark cloud hanging over their heads, not with an oversized barge pole. Moreover, the STP would have another major problem on its hands with Nigeria, unless Nigeria took the same view adopted by the STP of its own national interests, frankly an unlikely event. The ironic truth of the matter is that in many ways the interests of shareholders and citizens of both STP and Nigeria are intertwined.
As to the notion that ERHE got an unconsciounably good deal with the STP, and I know that this is not your point petemantx, it is so easy to be revisionist when looking at a deal done well in the past. Remember, at that time no other companies were willing to offer more than ERHC did, and most other companies were not interested in the slightest in any oil project in STP waters. There was no anticipation that oil would be trading where it is today, the project involved very, very deep waters, the technology wasn't what it is today, Nigeria was claiming the waters as their own, the STP had zero infrastructure, and there was political instability in both the STP and Nigeria. Generally, I'm certain you get the drift, the situation was very, very messy. Its politically expedient today to say that ERHE's predecessor, which incidentally Offer had no interest in and in whose activities he did not participate, took advantage of the STP but that view fails completely to account for the realities of STP's situation, in particular the complete lack of appetite of other oil companies for this seemingly very difficult project. As exploitive as ERHC is alleged to have been, the stark reality is that it offered the STP the best deal it could get, and this was after the STP beat the bushes of the market place for years. And at that time production was certainly no slam dunk. The truth of the matter is the ERHC invested millions of dollars in what other companies regarded to be an imprudent flyer of an investment. Remember as well that there already has been international arbitration, which ERHC won and that despite this on two occassions ERHC renegotiated the treaty so that it was more favourable to the JDA and the STP with respect to the EEZ. Remember as well, that insofar as ERHE's preferential rights are concerned, the Parliament of the STP has confirmed those rights and they have been validated by the JDZ authority.
What a mess the STP would have on its hands if it denied ERHE its preferential rights! That would not be in its national interests (or the interests of we shareholders). As to the bidding rights, well that will go to the company or companies who made the best bids. It is a matter of judgement which are the best bids but there is good reason to believe that ERHC's joint bids with Pioneer and Devon are as good if not better than any of the other bids in Blocks 2, 3 & 4. I don't think either the STP or the Nigerians will cut off their noses to spite their faces in reviewing the bids. They will be hard headed and bottom line oriented.
Offer was truly brilliant in bringing along the U.S. multinationals into a joint venture, not only because these companies are talented, have the necessary equipment, human resources and experience to be successful but because the involvement of these companies opens the door to awards that are somewhat face saving for the STP. Having said all that, those in the know in the STP understand that ERHC has become a whipping boy and there is another side to the so-called sordid story."
So we are still awaiting official approval from the Oil Council?
The spokesman for the Oil Council sounded very positive on Friday. But apparently they haven't given formal approval. Is that your read on the situation?
And what is Parliament's role in all of this?
At some point Menenez needs to realize that his opponents will do everything in their power to delay awards. It is in their political interests to do so. The longer they delay things the worse Menenez looks and the less likely he will be re-elected.
He needs to realize this is all political posturing from the opposition and end this thing by signing off on awards. The longer the delay the better for his opposition in next years elections.
Ruling through appeasment rarely works because nothing ever gets accomplished. Leaders need to be strong, make decisions and stick by them.
Obasanjo is a strong leader who would never put up with this. He is in charge and everyone knows it. Unfortunately the same cant be said for Menenez at this point in time.
So where are we at now in this process? It looks like today is the day that two candidates will be nominated to take the place of Carvalho (the ex Sao Tome Oil Minister).
"Sources close to the Sao Tomean government said that the ADI would put two candidates forward for the vacant oil minister position on Tuesday, potentially providing a solution to the problem."
Apparently we are still waiting on the Sao Tome National Petroleum Council to back the award recommendations of the JMC. They met last Friday and it seemed as if the spokesman for the council seemed to back the awards however apparently they haven't officially given the ok. (at least according to the Norval Scott story)
Also we had thought parilament was supposed to have met yesterday. Did that meeting take place? Is parliament a seperate enitity from the National Petroleum Council? Someone on the blog mentioned that Parliament was meeting today. Another poster said they will be meeting tomorrow. Who knows?
Does my message sound confusing? Im sure it doess. Because to tell you the truth Im confused and am just trying to figure out what has taken place in Sao Tome and what additional steps need to be taken. No one has spelled this out in any story in chronological order exactly what steps need to be completed before awards are decided on. Step A, B, C, D etc.
Valuation Model
Considering only the preferential rights, when figured as a percentage for the 9 blocks, ERHE has rights to 13.9% of the overall total.
Geco has estimated 14.4b barrels of reserves in these 9 blocks only. These estimates are only considering 17 of the most likely prospects out of 56 tested in the 9 blocks. Therefore if the 14.4b is only based on 17 of the 56 we can assume that there is potentially more than the 14.4b.
If the overall total interest (only counting the preferential rights now) for ERHE is 13.9% that implies a total reserve capacity for us of 14.4Bx.139= 2.002B.
The valuation of unproved oil assets is $3/barrel, which gives an asset value of just over $6B, which with just over 710M shares outstanding gives a share value of almost $8 per share. Now if OPERATORSHIPS are awarded its KATIE BAR THE DOOR. If your not in before awards you'll be chasing.
From RB
I am hoping that the spokesman's comments today in Sao Tome meant that they will be recommending that awards go forward. So they will make an official recomendation to the Prime Minister and then he will sign off on awards.
Discalimer: Sometimes I have issues separating what I hope will happen from what I think will happen.
I agree with everyone's interpretation of the article. It sounds fairly positive. So my main question is what is the next step?
Are they going to be meeting today? If not, will they be having another meeting. And if so when?
What else will need to be done to get the necessary signatures?
Its a typical article coming from Sao Tome. They never seem to ask follow-up questions. Such as "what further needs to be done and when will awards be announced?"
Disastorous agreement? Easy and politically expedient to say that now. Back then, it was the best STP could get and that is the best it got after trying to get all the respectable, non-exploitive, multi-nationals to deal with the STP. They wanted no part of the STP. Moreove, that disastorous agreement, is largely of historic interest. Remember, the agreement was renegotiated twice and in both cases more favourable terms were extended to the STP, and all of this after International Arbitration found that the Agreement was binding in law! Disastorous agreement, my derrier.
From Musings on RB.
Here is some good insight regarding drilling times from RB.
By: whistleblower318
10 May 2005, 12:41 PM EDT
Msg. 39299 of 39365
Jump to msg. #
For you people with limited knowlegde on drilling in deepwater....First of all they don't custom build rigs to drill for oil/gas in deep water. They contract a drilling rig (floater/drill ship) and drill an exploration well. Upon finding oil/gas pay zone, they then formalize their drilling campaign and production plans. In this part of the world, they would mostly utilize subsea wells with tendons/attached to buoys to offload crude onto FPSO ship and produce oil on shore. For the bashers that say that oil couldn't be produced for 2-3 years- it's just not right. With the right plan, and the right results that follow- oil/gas could be flowed in about a year. I don't claim to know much about the day to day dealings of this particular stock (hey who does??) but I can refute things I read from other posters. Any responses??
Most of homeports reports have been correct. And while it is true that it is probably a slanted report by LUSA, the opposition party is causing enough of a stir to delay the signing off of awards by the Sao Tome government.
If there was no political opposition in Sao Tome this would have been a done deal already IMO.
Having said that it seems that the goverment is set up that way and that its losers lament on the part of those in Sao Tome that didnt get their way.
So they should be wrapping things up shortly. I would hope.
Balance, good Im glad we are in agreement.
Well I take it you guys didnt agree with my earlier post. Oh well. That's understandable. Im not sure if I do either lol.
OT: Joe Shea
I have to say that I disagree with many of the negative comments that were directed at Joe Shea over the weekend. While I frequently take issue with some of his headlines and many of his interpretations of events, there is some valuable information that has been posted to the blog. The recent LUSA information along with the comments by Mutwadadi seemed to be accurate. Now we are seeing that being played out.
Those that contunually vent about Joe are just frustrated with the continual delays and need to tone down the rhetoric. Why direct it at him? He's not a politician in Sao Tome last time I checked.
I dont understand why Sao Tome couldnt have had this ironed out before hand. They should have. This should have been taken care of months ago. But the fact of the matter is "thats politics". I guess politicians are the same everywhere. I am not overly concerned though.
I would expect this to be resolved shortly.
Very true. Good point.
I think the key phrase is:
"just before the tiny african nation was due to make an eagerly awaited oil license award"
That sounds to me like we are still full steam ahead on awards and that they are imminent.
Sao Tome sacks oil adviser before licence award By Felix Onuah
ABUJA, May 7 (Reuters) - The president of Sao Tome and Principe sacked his petroleum adviser on Saturday just before the tiny African island nation was due to make an eagerly awaited oil licence award, authorities said.
A spokesman for the Joint Development Authority, a body created with Nigeria to administer a disputed offshore area where the licensing is taking place, said the move was made public in a presidential decree signed on Saturday.
"By this decree Patrice Emery Trovoada is dismissed as adviser on petroleum," spokesman Sam Dimka quoted the decree number 4/205 as saying.
The decree did not say why the adviser, a former president's son and seen as a possible candidate in next year's presidential election, was removed.
Sao Tome and Principe is located in the centre of the Gulf of Guinea off the West African coast, where several major oil discoveries over the last 10 years have turned it into one of the world's exploration hotspots.
Sao Tome itself currently produces no oil, but geologists believe its offshore areas could contain giant new fields.
The United States hopes to import a quarter of its oil from the Gulf of Guinea region in a decade, from 14 percent now.
A tiny and impoverished nation of 170,000 people, Sao Tome has been rocked by coup attempts and accusations of corruption as it prepares to become the latest African petro-state.
President Fradique de Menezes survived a military coup in 2003 by giving the military rights to oversee oil deals amid accusations of corruption. In May last year, four ministers were reshuffled in a political row over shady oil deals.
Last June Sao Tome sacked two senior members of the joint authority for unspecified reasons and nominated one of its citizens to replace a Nigerian at the head of the body. The authority released a statement in the same month saying bribery of licensing officials would not be tolerated.
The authority is currently engaged in its second licensing round for five oil blocks. The first round was aborted after awarding just one exploration contract, for $123 million, to a consortium led by U.S. giant ChevronTexaco .
The second round went through the bidding stage in December, receiving bids as high as $175 million, but the governments have yet to announce the winners and given no explanation for the delay.
05/07/05 19:16 ET
This stock price at this moment is an absolute gift. I would load the boat today if I had any dry powder left. Since I have already loaded the boat I will just watch the climb.
Well I have always been very positive regarding ERHE and what they would eventually win. I just tend to get frustrated with the twists and turns and delays at times like we all have.
So I never soured on ERHE or the JDA for that matter. I know this is a very complicated process, so when you look at the big picture the delays have been understandable.
I just need to dose down on the caffeine before I post. Everything is coming together great. The JDA release certainly helps greatly as does the Menas article which clarified exactly what has been going on the last few weeks.
No problem sorry for my tirade earlier. LOL
Guys post this on RB. Its from Menas which is very well respected. It definitely helps to explain what is going on.
Its obviously a few days old but definitely sheds light on what is happening.
JDZ awards edge towards controversial compromise
menasassociates
newsletters
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NIGERIA FOCUS
APRIL 2005 VOL 6 NO 4
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JDZ awards edge towards controversial compromise
Intense negotiations have been taking place in a bid to reach consensus between Nigeria and São Tomé e Principe over the award of five blocks in the Joint Development Zone along their common maritime boundary.
The Joint Ministerial Council, made up of senior officials from the two countries, began meeting to approve the awards on 26 April. The meeting broke up two days later without any formal announcement, amid indications of a complex and potentially controversial compromise.
Some São Tomé officials are understood vigorously to have opposed the proposed allocation of up to 20% in awarded blocks to several indigenous Nigerian companies which either have no experience in oil and gas or were registered at the last moment to participate in the round. These include Momo and Equinox, both believed to be controlled by the same Abuja-based businessman, and Godsonic and Hatman, both linked to a controversial confidant of President Olusegun Obasanjo, ruling People’s Democratic Party heavyweight and former works and housing minister Tony Anenih.
Nigeria is understood to have opposed counter-proposals to award operating rights in block 4 to Anadarko over Noble, its preferred choice. Nigeria was also lukewarm over pressure to increase significantly the stake offered to Indian firm ONGC and its partner Equator. Equator’s chief executive Wade Cherwayko, is associated by some officials in Nigeria with one of his previous companies, Abacan, which collapsed spectacularly and at some cost to its local partner in 1997, after banks lost confidence in much repeated promises of huge returns from investment in the Niger Delta.
It is understood Nigeria and São Tomé reached a compromise on 28 April after three days of talks in Abuja in a deal that allows for the award of all five blocks but includes the participation of new players. The proposed deal requires the approval of the National Petroleum Commission in São Tomé, before formally being signed off by a reconvened meeting of the JMC.
Officials hope to conclude the round and announce awards in time for a visit to Nigeria on 4 May by São Tomé’s President Fradique de Menezes.
Provisionally, it appears operating rights may be awarded as follows:
- block 2: Devon, Pioneer and US-listed, Nigerian-controlled ERHC;
- block 3: Anadarko;
- block 4: Noble, ERHC and an as yet undisclosed party;
- block 5: Iran’s ICC/OEOC;
- block 6: Filtim Huzod, a Nigerian independent with no previous experience in the sector, which has partnered with China’s Sinopec.
Some São Tomé officials are understood to maintain profound reservations about the proposed deal. They have threatened to disclose details of the ownership of some of the indigenous companies with more limited capacity. They have also hinted at disclosure over the methods employed to lobby members of the National Oil Commission in São Tomé, which they say would provoke a profound political crisis in the country.
However, there are counter-allegations that elements of this constituency are also vulnerable to charges of potential conflict of interest, which could prove equally damaging politically, a year ahead of presidential elections in São Tomé. Officials close to the process appear confident that the prospect of any damaging disclosures provoking an equally damaging response is likely to facilitate an uncontentious move towards awards in early May, although the process remains delicate and vulnerable.
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It figures its the Social Democrats that are screwing things up.
They have been screwing things up in this country for the last two hundred years.
By: speculator29
04 May 2005, 08:02 PM EDT
Msg. 36193 of 36195
Jump to msg. #
Another article dated tomorrow...
Pay close attention to this section:
"Therefore the social democrats demand that no decision is approved without that has one to seem independent of technician national or a company of international reputation that confirms that the decisions proposals for the ministerial advice joint S.Tomé and Príncipe - Nigéria the regulations and rules established for correcta are in agreement auction as organization."
Sounds to me like they want someone with expertise to review the the awards before ratifying them.
Links at the bottom.
________________________________________________________
LEGISLATIVE COMMITTEE DETECTS ERRORS IN AS THE AUCTION 05.05.2005-J.Vitrina-(S. Tomé) the auction as process in the zone of joint exploration between S.Tomé and Príncipe and the Nigéria is to be little transparent according to legislative committee for the petroliferous subjects. The commission today congregated with the representatives of the joint authority and the government and arrived the conclusion that serious errors in the process exist. Therefore Carlos Snows president of the commission said that he recommended the government not to assume no decision without that before the national agency of the oil presents its report on the substance. The hearing appears one day after the MLSTP/PSD reacting through an official notice the alleged breakings the rules of the game in vigor for the attribution of participativos interests the petroliferous companies in as the auction carried through in the zone of joint exploration with the Nigéria. For the social democrats these breakings to be confirmed wound the principle of the much-needed transparency for one correcta management of the resource petroliferous. The MLSTP/PSD says to exist clear tests of that some national and foreign individualities with evidentes interests in some companies who had left clearly benefited in this auction, they occupy positions of importance of state, or have linkings with people of the state who participate in process of decision in oil substance, nominated in the national advice of oil and comité ministerial set. Therefore the social democrats demand that no decision is approved without that has one to seem independent of technician national or a company of international reputation that confirms that the decisions proposals for the ministerial advice joint S.Tomé and Príncipe - Nigéria the regulations and rules established for correcta are in agreement auction as organization. The immediate replacement of the legality by means of the removal of its actuais functions of all still demands the MLSTP/PSD those individuals that comprovadamente possess direct or indirectos interests in the related activities. The alert Party still the people for the attempts in course in the direction of a small group to use to advantage itself improperly of the resources of the oil in personal benefit and damage of the general interest of the santomenses. Jose Bouças
http://www.cstome.net/vitrina/Comissão.htm
Here is a great post by mabenn that I agree with:
By: mabenn1
04 May 2005, 07:55 PM EDT
Msg. 36182 of 36187
(This msg. is a reply to 36123 by wire1540.)
Jump to msg. #
I agree. There will be no rebid. These guys need to hang on to the last shred of credibility they have left. Besides that, there is no reason for a rebid.
There was no fault in the bidding process. The only thing people are making noise about is the DECISION process. As SH70 said, in the very worst of cases (which I do not think will happen), they go back and reevaluate the existing bids.
I am hopeful that the report we got yesterday, that a delegation from the JDA went to Sao Tome and successfully smoothed things over is true, and that these articles are a day late.
From my reading of the Treaty, the JMC has full authority to make final decisions, but they must be by a consensus of the JMC. Apparently they were not, based on yesterdays's article. So we also heard that Menezes and Obasanjo were meeting and were in agreement over the awards.
I think it is interesting that these issues arise within a day or two of the JMC making a final decision. You can't possible convince me that someone said - "Well now that awards were made, we better go investigate the background of the JMC members." What BS. Surely these issues were not previously unknown.
My guess is that the people raising these allegations are just as deep in bed with some other company, the only problem is their team didn't win.
This whole thing sounds purely political to me. Notice the parlimentary special committee did not claim any jurisdiction over the process. This is not to say they cannot apply significant political pressure. Could the threats regarding politicians signing agreement that are not in the best interest of Sao Tome been specifically directed at Menezes?? Today's second article was all about statements made by the opposition party! This may well be politics as usuall in Africa. Of course American stockholders will freak out over such allegations.
What we really need at this point is some genuine insight from someone who really understands African political workings.
Obasanjo wants this thing done, and he wants it done now!
Rancho this is the thing that needs to be determined. Is the following information a rehash of yesterday's news. Or is this new news that occurred this afternoon after the JDA flew to Sao Tome to explain the procedure yesterday?:
"STP Legislature Says 'No' to AWARDS
FYI, Folks, parliament's oil commission has urged the STP government not to approve JDZ awards until a thorough review of the entire process.
This according to Portuguese Lusa news agency dispatch just in ex-Sao Tome.
Our wait continues.
By Homeport, at 4:35 PM "
Rancho, we have been hearing that awards are done for how long now?
Just because awards are done doesnt mean they are etched and stone and will be announced. Awards being done doesnt mean a damn thing if they are not officially announced.
And IMO they are not done until we get the necessary signatures. And we dont have those yet.
I remember when a poster joked about awards coming on Groundhog Day. I thought he was nuts and that awards would be well before then. Well here we are in May.
Unbelievable
My thoughts are that awards are a long way off. That this whole process is a farce. And that the JDA needs to issue a press release as soon as possible to clarify things.
I dont view Exxon leaving as a good thing. (Although I could care less what they do because they are not in our blocks.) I dont view the JDA as having to go to Sao Tome to explain the awards as a good thing. I dont view the report that the oil ministry today rejected those awards as a good thing.
Its all bad news as far as im concerned. If all of the above is true. Which Im not sure it is.
And P.S. to all of those that blamed Exxon for all of the delays think again. Things have not run any more smoothly with them out of the picture.
This doesnt sound too positive. I hope the JDA issues a press release soon to clarify things. This came off Joe's Blog so I dont have a link to the actual story:
STP Legislature Says 'No' to AWARDS
FYI, Folks, parliament's oil commission has urged the STP government not to approve JDZ awards until a thorough review of the entire process.
This according to Portuguese Lusa news agency dispatch just in ex-Sao Tome.
Our wait continues.
By Homeport, at 4:35 PM
From Hurricaneoffor on RB:
****GOOD NEWS UPDATE***************************
I just spoke with someone at JDA who does not want to be named. They said to be looking for a PR today on their website (of course that could mean tomorrow LOL). Anyway, what was relayed to me is the everything is COMPLETELY DONE on the Nigerian end. On the STP side they have to have 2 people sign off on awards. The 2 people are the President and Prime Minister. Source said that PM had been traveling and will sign off on awards very soon. I also inquired about the STP concerns about sig bonuses. The source explained that meetings occured in STP the last couple of days and everything has been explained to them. Fears and anxieties have been OVERCOME. The source explained to me that Nigeria has over 14 years of O&G experience while STP NONE. Nigeria understands STP concerns and this is why they met with them to alleivate these concerns. Source said that ALL 5 BLOCKS will be awarded.
Expect News and awards soon folks. It's all coming together IMO. You can call the JDA yourself:
011 234 9 524 1064 or 011 234 9 524 1069, or
011 234 9 524 1065
I think this whole thing has already harmed both countries. I dont see alot of overwhelming interest in the Nigerian EEZ. Companies are not going to waste valuable time and resources dealing with two countries that cant get anything done or cant stick to any deadlines.
"I have watched all of this very closely. My conclusion is that at the end of the day, the higher ups (presidents Obasanjo and De Menezes) will do whatever the heck they want anyway..."
Well they better do something soon. This has dragged on for far too long. How will they drum up any interest in their respective EEZ's when this whole JDZ process has been such a circus?
Why would a company waste the time to bid when they have to sit around tieing up valuable resources waiting for a decision that never comes?
These governments are making a serious miscalculation IMO by allowing this thing to stall and for failing to stick to deadlines.
Companies will not want to bother doing anything in this part of the world again.
I predict a lengthy delay. Sorry but that's my prediction. Just because Sam was there, I dont see that as a positive. I see that as a negative that he would have to fly over their in the first place. Things had to have deteriorated to a point that he felt it emergent to go their.
I thought Sam had said a month ago that there were no conflicts between the two countries and they had been taken care of?? Well apparently that wasnt the case.
And now he's coming back so that is supposed to be good news? I doubt it. He probably came back in frustration.
I am predicting a lengthy delay here.
I agree completely. But they should have understood all of this before. We were told by the JDA 2 months ago that those types of issue between Sao Tome and Nigeria had been resolved. (Higher signature bonus vs. Fast track drilling).
It doesnt look like some members of the Sao Tome governement got the memo.
Well hopefully this is just like the Dems and Republicans fighting in the US Senate. I sure hope this doesnt lead to gridlock and another delay.
Unfortunately delays are par for the course with this stock. By the time the Sao Tomen's and Nigerians announce awards people are going to be driving around in electric cars and ll of that oil they have in their possession will be worthless.
By: balance_builder
02 May 2005, 10:09 PM EDT
Msg. 34435 of 34446
(This msg. is a reply to 34365 by jibby22.)
Jump to msg. #
Jibby22....APC signature bonus is $33 million more than ERHE/NBL.
APC's work committment was to spud one well in 3 years time.
ERHE/NBL's work committement was to spud 3 wells in 1 years time.
Figuring the cost to spud 1 well in this setting is approx $35 million dollars.
APC's investment: 11.66 Million per year
ERHE/NBL investment: $105 Million per year
Its a no brainer which company has offered the better package IMHO.
IMO This is the quote from the Lusa report which is creating the controversy:
"On Friday, Radio RDP Africa reported that there had been a rejection of the bidders with the best proposals, in favor of oil companies that have some Sao Tomese citizens as shareholders."
So Radio RDP Africa, who probably has no knowledge of the oil business, reported that the bidders with the best proposals were rejected.
Obviously they are only looking at the signature bonuses that were offered and not the fast tracking and technical capabilities of the bidding companies.
"Arlindo de Carvalho denied any political favoritism, trying to stress that "we have not rejected anybody; we have distributed the blocks" as a function of the financial proposals and technical capacities of the companies."
So here an official from Sao Tome tries to explain the parameters that were looked at. Once awards are actually announced the governments of both countries will be better able to explain their decision making process. All IMO
The thing that bothers me a bit is this is the same thing we were hearing about two months ago.
Nigeria preferred companies who were willing to fast track whereas Sao Tome preferred companies with higher signature bonuses.
The JDA told us that those issues had been resolved, were minor in nature and that the disagreements had been taken care of.
That doesnt seem to be the case.
IMO they should have had this cleared up already.
I think its a mixed bag in terms of trading tomorrow. Some will see it as bad news in that it could mean more controversy and thus a potential for more delays. Others will see it as good news in that ERHE is the winner in terms of block awards.
These journalists covering the event might have an "anti-government/anti-business" slant to their reporting much like many members of the liberal U.S. media. So its hard to say whether a true controversey exists or whether they are just trying to drum one up.
Someone needs to explain to them that Noble offered to drill 3 wells in 1 year. And that although the signature bonus money is less there are definite advantages to getting oil as quickly as possible. They should be made to understand the problems Nigeria currently faces where they have fields that were awarded 10 years ago with no drilling activity. So alot of good that is doing for Nigeria now. Im sure in retrospect they would have awarded those blocks to companies that paid less up front but were more hungry to drill and increase production.
Delaying this process is only hurting the people of Sao Tome. The longer this gets dragged out the longer it will take them to realize oil revenue.
What they need over their is better PR and an explanation to the media as to the importance of bringing oil to the market as quickly as possible vs. looking at the shortsighted approach of only looking at signature bonus.
I guess stupidity in the media isnt only limited to the USA>
Well I should have said:
ERHE/Pioneer/Devon consortium will win Block 2.
Anadarko will win operatorship of Block 3.
ERHE/Noble will win operatorship of Block 4.
(And it goes without saying we also have percentage rights in Block 3, we just wont win operatorship IMO.)
(And Anadarko will have percentages in Block 4 etc etc.)
Then Im hoping that this gets wrapped up by Wednesday. Then Obasanjo visits Bush on Thursday and says "We awarded significant blocks in the Gulf of Guinea to US companies. We expect a US military presence in that zone."
To which Bush replies, "Sure, as long as I can get me some shares of ERHE."