PLATTS News on JDZ
<<Strong indications have emerged in recent weeks that Chevron has encountered a substantial oil-bearing structure in the well, which may also straddle nearby block 2 in the JDZ.>>
Addax Petroleum has increased its participating and operating interest in Block 4 of the Nigeria/Sao Tome and Principe Joint Development Zone from 33.3% to 38.3% by buying the 5% stake held by Overt Ventures, Swiss-based Addax said
Thursday.
The assignment of Overt's interest to Addax has been approved by the Nigeria/Sao Tome and Principe Joint Development Authority.
Addax will pay $10 million to Overt for the interest and a further $5
million to the JDA, including a $4.5 million signature bonus.
"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 Petroleum," said Addax President and CEO Jean Claude Gandur.
Block 4 covers 857 square kilometers with water depths ranging from around 1,800 to 2,200 meters. Seismic data acquired over the block is
presently being analyzed to determine potential drilling locations.
The JDZ is around 200 kilometres offshore Nigeria, adjacent to areas
where several large petroleum discoveries have been made.
--
The partners in block 1 in the Nigeria-Sao Tome Joint Development Zone in the Gulf of Guinea have yet to present a report on the results of drilling of
the Obo-1 wildcat completed on March 15, the government of Sao Tome and Principe said Tuesday.
"We are still waiting to hear from Chevron. We are eager but we have not heard anything officially from the company," Sao Tome's National Petroleum Agency Executive Director Luis Prazeras said in a telephone interview.
A Chevron spokesman said there had been no update since it issued a statement March 17 that a review of the results of the Obo-1 well was underway to determine the next steps in the exploration program.
Strong indications have emerged in recent weeks that Chevron has encountered a substantial oil-bearing structure in the well, which may also straddle nearby block 2 in the JDZ.
Block 1 operator Chevron and its partners--ExxonMobil, Dangote-EER and
Afren--started drilling the well in mid-January. The block will test the potential of Nigeria and Sao Tome's shared offshore region and has generated considerable interest from global upstream players. The consortium won exploration rights to the block with a $123 million bid in an October 2003
bidding round.
Of the six blocks awarded in 2004 and 2005, Prazeras said production sharing contracts had yet to be signed for blocks 5 and 6 but that the process should be concluded by July. "Our expectations are that these blocks will be
signed in June or July. That is what we expecting. Right now, the Joint Development Authority is working on negotiations, so we hope by July everything will be signed," he said.
FINAL THREE BLOCKS NOT FOR SALE
Prazeras said Sao Tome and Principe and Nigeria had withdrawn from auction blocks 7,8 and 9, the last three of the nine JDZ oil blocks. These
blocks could be looked at again after the start of operations in the six JDZ
blocks already awarded, he said.
"For now, we have no plans to put them on the market, it will take some
time. The JDA is concentrating on the ongoing blocks so blocks 7, 8 and 9 will
definitely not be put on the market in the short term. It will take some time
to come," he said.
Prazeras said Sao Tome could launch tenders for oil exploration in its
Exclusive Economic Zone by the middle of next year.
"We are finalizing in house the papers as far as the legal framework is
concerned. So we believe that by middle of the 2007, something will happen in
the EEZ zone," he said.
The former Portuguese colony of some 140,000 people has up to now relied
almost exclusively on the export of cocoa for foreign currency revenue and is
one of the world's poorest countries.
Some studies suggest the islands sit on between 6 billion and 11 billion
barrels of crude oil.
Under the terms of a treaty signed in 2002, Nigeria, which is already
Africa's largest oil producer, will take 60% of all oil and gas revenues from
the shared zone. Sao Tome will take 40%.
--Jacinta Moran, jacinta_moran@platts.com
