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New fish on hook for JDZ awards
The second licensing round in the Joint Development Zone (JDZ) administered in disputed waters in the Gulf of Guinea by Nigeria and Sao Tome&Principe is finally drawing to a close.
At stake are five deep-water licences blocks 2, 3, 4, 5 and 6 of varying prospectivity. It is understood all will be awarded before the end of this week.
The Joint Ministerial Council is constrained by bilateral treaty provision to conclude the round within a set period and this has long since expired, according to Nigerian officials. Abuja is keen to see the gridlock resolved.
Equity stakes in the three most attractive blocks have been agreed and some minor details are being finalised for the less popular blocks 5 and 6, but latest indications are that the two presidents Olusegun Obasanjo of Nigeria and Fradique de Menezes of Sao Tome are agreed on the main players.
Nigeria in particular is keen to see the operatorship of Block 2 go to US explorer Pioneer Natural Resources. Pioneer bid with Devon Energy and US minnow ERHC Energy, linked to Nigerian indie Chrome Energy, which also bid directly and already enjoyed preferential equity rights on this and several other blocks.
The Pioneer group as a whole will likely be awarded 70% of Block 2 with 10% going to Bermuda-registered Equator Exploration (EEL) recently listed on London's Alternative Investment Market which also enjoys entitlement to a share of licensing fees from JDZ seismic data sales under a joint operating agreement with Petroleum Geo-Services. Another 20% will be awarded to two unidentified Nigerian indies.
An operating stake of 50% in Block 3 will be awarded to Anadarko Petroleum, with ERHC landing 35% and EEL 10%. Spare equity on the block will go to a Nigerian indie.
Noble Energy, in partnership with ERHC, also fought hard for Block 4 where Noble has now convinced the Joint Development Authority that its drilling budget and clear commitment to three wells outplays Anadarko's one-well bid. The Noble/ERHC tie-up will likely be rewarded with a 70% stake, with Noble operating and a minimum of 20% awarded to local indies.
It is understood the PSCs will bear a strong resemblance to terms signed earlier this year for Block 1 with operator ExxonMobil, Chevron and Dangote-Energy Equity Resources. All players want to drill without delay and even the World Bank is understood to have advised Sao Tome that the above line-up was the best commercial deal.
Hardest to convince was Houston-based Patrice Trovoada, the son of former Sao Tomean President Miguel Trovoada and until last week Menezes' Special Adviser on Oil Affairs. Patrice Trovoada was ousted from office last week after pushing hard for EEL and its partner ONGC Videsh to operate Block 4, but to no avail.
Meanwhile, Sao Tome's Natural Resources Minister Arlindo Carvalho tendered his resignation this week, citing pressure over delays in concluding the round amid allegations of "irregularities" in negotiating awards.
Catch of the day:Nigeria and Sao Tome are set to reel in big exploration players on blocks to be awarded under the second JDZ licensing roundPhoto: ELIN HOYLAND
