ERHE.OB - UPDATE 1-Nigeria, Sao Tome sign oil deal with ERHC, Sinopec ( from the New Prospects List ).
(Adds details, background)
By Camillus Eboh
ABUJA, March 15 (Reuters) - Nigeria and Sao Tome on
Wednesday signed a production sharing contract with a consortium
led by ERHC <ERHE.OB> and Sinopec <SNP.N><0386.HK> for one of
the deep-water oil exploration blocks they jointly administer.
Nigeria, Africa's top oil producer, and the tiny twin island
nation of Sao Tome and Principe, which has not yet started
producing oil, have a joint development zone in the Gulf of
Guinea, one of the world's most promising exploration areas.
The consortium led by little-known Houston-based ERHC and
Chinese energy giant Sinopec will pay a signature bonus of $71
million for block 2 in the joint development zone. The two firms
are the operators.
ERHC, which has been at the centre of controversies since it
gained stakes in all five exploration blocks awarded by Nigeria
and Sao Tome last May, brought in Sinopec as its partner for
block 2 after two previous partners pulled out.
China is among several Asian economic heavyweights vying
with the United States for West African oil in an effort to
secure supplies from outside the volatile Middle East.
Chinese, Indian and Korean firms have competed fiercely for
other Nigerian oil concessions.
Other stakeholders in block 2 include London-listed Equator
Exploration <EEL.L> and ONGC <ONGC.BO> of India, which together
have 15 percent. A & Hartman has 10 percent while Foby
Engineering and Momo Oil and Gas have 5 percent each.
DELAYS
The Nigeria-Sao Tome licensing round was repeatedly delayed
by arguments between the two countries and accusations of
corruption. After the blocks were finally awarded, the process
of negotiating contracts was also delayed for months, with
companies pulling out and new allegations of bribery.
U.S. firm Devon <DEV.N> ducked out of a partnership with
ERHC in block 2 last year. It was replaced by another U.S.
company, Pioneer Natural Resources Co. <PXD.N>, which pulled out
on Feb. 7 because of disagreements with ERHC.
In block 4, ERHC also lost its initial partner when Noble
Energy withdrew and was replaced by Canada-based Addax Petroleum
<AXC.TO>.
ERHC, listed in the United States but controlled by private
Nigerian firm Chrome, emerged as the big winner of the joint
development zone licensing round despite having little
exploration experience or financial means to carry out the work.
It was the only company to gain stakes in all five blocks
awarded last May. It was named operator, along with other
companies, in two of the blocks.
The Joint Development Authority says ERHC had been granted
preferential rights on stakes in the blocks in return for
exploration investment in Sao Tome in the 1990s, before the
joint development zone was set up.
Details of those investments have not been made public.
Late last year, the Sao Tome attorney-general said there
were indications that ERHC made improper payments to Sao Tome
officials. The company denies any wrongdoing.
Nigeria has dismissed the attorney-general's report as a
product of internal politics of Sao Tome, which holds elections
later this year and where political tensions have risen as the
country prepares to enter the world of big oil.
ca;AXC de;CHU gb;EEL gb;SNP hk;386 in;ONG us;EASA us;ERHE us;PXD us;SNP
Source RTRS Reuters News
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