News
20.08.2004
EXPECTATIONS that a few more blocks in the deep waters of the Gulf of Guinea would be awarded by mid-August were dashed last week as it became apparent that talks with potential suitors over block 6 between Nigeria and Sao Tome had become bogged down.
However, the Abuja-based Joint Development Authority administering the round under joint Nigerian/Sao Tomean auspices is understood to be determined to confirm key awards by the end of the month.
Operatorship of Joint Development Zone block 1 has gone to ChevronTexaco with ExxonMobil picking junior equity and final terms and conditions for a formal PSC award are expected shortly following negotiations in London this week.
US explorer Pioneer Natural Resources' formal closure last week of a joint JDA participation deal with minnow Environmental Remediation Holding Corporation also bodes well for an imminent announcement on blocks 2 and 4, where ERHC has a priority rights arrangement. JDZ block 2 is understood to be a done deal with would-be operator Pioneer hoping to finalise PSC terms by the third quarter.
Negotiating positions on block 4 are less certain, with Petrobras also showing persistent interest and Noble Drilling actually preparing to commit a rig in the context of its emerging alliance with ERHC for the purpose of bidding the block.
Domestic pressure to "Nigerianise" some aspect of the exercise has increased the likelihood of local independent participation in block 6, perhaps in connection with the Nigerian National Petroleum Corporation. Chinese interest has also been noted with Beijing always keen to expand its portfolio.
Patience on both sides of the water is wearing thin, however. Official talk this week is of giving the process a few more days and if the modalities for awarding block 6 cannot be agreed then it will lumped in with the other five unallocated permits for possible award next year nine blocks were originally offered.
Nigeria is gearing up for a new deep-water licensing round in its own Exclusive Economic Zone, and Sao Tome is loath to see future JDZ signature bonuses diminished by forcing companies to compete with Abuja's licensing schedules.
Following a meeting last weekend between Presidents Olusegun Obasanjo and Fradique de Menezes, there are fresh indications that remaining JDZ blocks may be open for direct tender rather than by open competitive bidding as required by the Statute governing the JDA. Such a move is likely to cause legal controversy and may be subject to a successful renegotiation of the bilateral protocol establishing the JDZ.
The prospect of negotiating directly with the JDA for unallocated acreage would have the advantage of allowing medium to bigger sized players back into the game, having failed to bid the first time around.
The interest of sidelined players would then be rekindled while Sao Tome would not have to accept lower-than-expected signature bonuses.
barry.morgan@upstreamonline.com
AI
