ERHC MENTIONED REUTERS UPDATE 2-Chevron strikes oil in Nigeria/Sao Tome well [GBWMVHV]
(Updates with further background)
By Tom Ashby
LAGOS, May 26 (Reuters) - The first well to be drilled in
an offshore area shared by Nigeria and Sao Tome has found oil
and gas, but it is premature to say if the discovery is
commercially viable, U.S. energy giant Chevron <CVX.N> said on
Friday.
Any commercial find in the area would be momentous for Sao
Tome and Principe -- an impoverished island nation in the Gulf
of Guinea which lives mostly from fishing -- and a big relief
for an industry which has bet hundreds of millions of dollars
on the concessions.
"It is oil and gas. It's good, but it's a new region. We
have data and we have to look at it," a Chevron spokesman
said.
The California-based company took two months to complete
the Obo-1 well, which lies under 1,720 metres of water in the
formerly disputed border zone, and found at least 150 feet (45
m) of hydrocarbons in several reservoirs, it said in a
statement.
"It is premature to determine whether or not Chevron and
its co-venturers have made a commercial discovery," the
statement said.
The well also provided samples of rock and liquids which
must be examined to determine how the company will proceed with
the appraisal of the reservoir. Oil companies normally drill
several wells in a new reservoir before declaring it fully
commercial.
Chevron holds 51 percent of the contract in block 1 of the
Nigeria/Sao Tome Joint Development Zone where this well was
drilled, while ExxonMobil <XOM.N> has 40 percent and a local
partner Dangote Energy Equity Resources has the rest.
The announcement will be welcome news for other companies
that paid millions of dollars for rights to drill in nearby
areas, including ERHC <ERHE.OB>, Addax <AXC.TO>, Sinopec
<SNP.N><0386.HK> and Anadarko <APC.N>.
The award of drilling licences in the joint zone has been
plagued by delays and accusations of corruption, while
expectations of an oil windfall have felled political
instability in Sao Tome.
Under the treaty governing the joint area, Nigeria gets 60
percent of the revenues from oil production while Sao Tome gets
40 percent. But the countries only start to benefit after the
companies have recouped their investment, which is likely to be
in billions of dollars if oil is found in commercial
quantities.
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26May06 18:44 GMT
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