On a slow day: This post is a reminder on how we got our blocks, shows transparancy.
PRESS STATEMENT
ISSUES ON NIGERIA-SAO TOME AND PRINCIPE JDZ BLOCK
AWARDS ANNOUNCED ON TUESDAY,31st MAY 2005.
Reference is being made to the Editorial of the Washington Post of 1st
June 2005 captioned ‘’CORRUPTION IN NIGERIA’’, with particular
reference to the recently concluded 2004 Nigeria/Sao Tome and Principe
Joint Development Zone (JDZ) Licensing Round. Below are comments
on the salient issues regarding the recent Block awards in the JDZ
The Washington Post editorial of June 1, 2005 relied on unnamed
Nigerian press reports which it appears were not substantiated by the
Washington Post. Also, the article is devoid of any factual information to
support its unfounded allegations of corruption in the conduct of the bid
round process.
At no time did the Washington Post contact the JDA for factual
information concerning the bid evaluation process.
PREFERENTIAL RIGHTS
In 2003, the JDA conducted its first bid round which concluded with the
award of equity in Block 1 to Chevron-Texaco and Dangote – Energy
Equity Resources. ExxonMobil exercised its pre-existing preferential
rights which resulted in award of 40% equity to ExxonMobil in the same
Block. ERHC Energy also exercised its pre-existing preferential rights,
but was not awarded any equity in that bid round.
Both ExxonMobil and ERHC Energy are US publicly quoted companies.
The JDA announced the second bid round in November 2004, in which it
offered equity in Blocks 2, 3, 4, 5 and 6. This was without prejudice to
the pre-existing preferential rights of both ExxonMobil and ERHC
Energy, a fact that was disclosed in the Guidelines to bidders for the
second licensing round. Additionally, ExxonMobil did not bid while
ERHC partnered with other world reputable independent oil companies
such as Devon and Pioneer to bid for block 2 and Noble for block 4.
The bids for the second licensing round were submitted and opened on
December 15th, 2004. At the bid opening ceremony, the bidders and
their respective signature bonus bids were announced. However, other
details pertaining to the commercial and technical aspects, including the
work program, were not announced at the bid opening ceremony, but
were given due consideration during the exhaustive bid evaluation
process.
In line with the earlier mentioned pre-exiting rights, ExxonMobil was
given 30 days within which to exercise its preferential rights to take up
25% equity in any two Blocks of its choice.
ON OPERATORSHIP OF THE BLOCKS
Out of the five Blocks on offer in the second bid round, US companies
submitted bids for equity in only three Blocks, namely Blocks 2, 3 and 4.
The results of awards in these Blocks are as follows:
Block 2: 35% equity and operatorship has been awarded to a
consortium of US companies comprising Devon Energy, Pioneer
Resources, and ERHC Energy. In addition, ERHC Energy has been
awarded its pre-existing preferential right of 30%.
Block 3: 51% equity and operatorship has been awarded to Anadarko, a
US publicly quoted company. In addition, the US consortium of Devon,
Pioneer, and ERHC has been awarded 25% equity, which includes
ERHC’s 20% pre-existing preferential rights.
Block 4: 35% equity and operatorship has been awarded to a US
consortium of Noble Energy and ERHC Energy. In addition, ERHC has
been awarded 25% equity, being its pre-existing preferential right.
In arriving at these awards, utmost effort was made to spread the award
of operatorship to financially and technically capable companies to
ensure fast track exploration and development of the Blocks. In this bid
round, in no case has an award been made to a Nigerian company over
a US contender that bid substantially more.
Other partners (including Nigerian companies) in the Blocks were
awarded based on the subsisting policy of transfer of technology in the
oil industry. In fact, most companies that submitted bids during the 2004
Round got some stakes, after meeting the minimum requirements, as
stipulated in the guidelines. This is a means of encouraging and
rewarding their confidence and faith in the JDZ.
At no point did any of the state parties interfere in the process. The
process went through transparent and competitive bidding. Bids were
evaluated according to set guidelines and criteria. Following from these,
the Joint Development Authority (JDA) submitted its recommendations
to the Joint Ministerial Council (JMC), which exhaustively deliberated on
the report and arrived at a position acceptable to the two countries. In
that light JMC observed with satisfaction that the process of the 2004
Licensing Round was conducted in conformity with the Abuja
Declaration on Transparency and Good Governance signed by the two
Heads of State in June 2004.
ON PAYMENT OF SIGNATURE BONUS INTO HALLMARK BANK
This bank was duly vetted in 2003 and later approved by the JMC in line
with the JDZ Treaty. This was long before the first Licensing Round
results were announced.
ON PUBLICATIONS REGARDING THE PRODUCTION SHARING
We are in full compliance with the requirements of the JDZ Treaty as
well as the Abuja Declaration on Transparency and Good Governance
and have consequently published the payments of Block 1 signature
bonus on the JDA website: www.nigeriasaotomejda.com .
Nigeria-Sao Tome and Principe
Joint Development Authority
Abuja
2nd June 2005
AI
