ERHC short article on FORBES
U.S. company takes up Nigeria/Sao Tome oil rights
Reuters, 04.16.04, 1:28 PM ET
LAGOS, April 16 (Reuters) - A little-known U.S.-based company has exercised rights in six oil exploration blocks on offer by Nigeria and Sao Tome, according to a filing with U.S. authorities, opening the way for the final winners of the landmark licensing round to be announced soon.
The two countries began the licensing process for nine offshore blocks in the Gulf of Guinea last October, marking Sao Tome and Principe's first steps into the world of big oil.
The decision by Environmental Remediation Holdings Co. (ERHC) to exercise its option follows a similar step by ExxonMobil (nyse: XOM - news - people) in February, and could presage a final announcement of winners as soon as next week, authorities said.
ERHC, a Texas-based Nigerian-owned company also known as Chrome, claimed its biggest option of 30 percent in block two, which was the second most sought-after block in last October's bidding round, the filing with the U.S. Securities Exchange Commission dated April 13 showed. The filing also showed ERHC exercising a 25 percent interest in block four, 20 percent in blocks three and nine, and 15 percent in blocks five and six. ExxonMobil had in February exercised a 40 percent interest in block one, which was the most sought-after block in last year's bidding. The two companies had preferential rights because they had already invested in exploration work under a deal brokered with Sao Tome before the disputed area became a zone managed jointly by the two countries.
When Nigeria and Sao Tome agreed to develop the area together in 2000, the companies renegotiated their deals with the joint authority and gained the rights.
The Gulf of Guinea has seen a swathe of huge oil discoveries in deep ocean depths over the past decade, and the United States sees the area as a strategic supplement to its oil supplies from the war-torn Middle East.
HIGHEST BID
In October's bidding round, the highest bid was $123 million offered by ChevronTexaco (nyse: CVX - news - people) for block one, so it is likely to develop that block jointly with Exxon. The second highest bid was for block two, where Nigerian dredging company Foby Engineering bid $113 million. Foby was also top bidder for block nine. Sahara Energy was the top bidder for blocks three and five, ECL International lead the pack for block four, Maurel et Prom was top bidder for block six, and Fusion was sole bidder for block seven. Block eight attracted no interest.
Sam Dimka, spokesman for the joint development zone, said it was still not possible to say for certain who had won what Signature bonuses are only one aspect of the offer. Results of the technical bids and due diligence on the participants has not been announced yet, and that is all relevant to the final selection," he said. A company would have to show it is financially and technically capable of carrying out the work to win the contract, he added.
The two countries will now hold a joint ministerial council, possibly as soon as next Thursday, to announce the final winners, Dimka said.
Copyright 2004, Reuters News Service
