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EHRC: São Tomé & Príncipe and ERHC, at the heart of opportunity in West Africa’s Gulf of Guinea
A remarkable gem comprised of two tropical islands, the small nation of São Tomé and Príncipe lies off the coasts of Nigeria to its North, Equatorial Guinea to its East, and Angola to its Southeast. Though situated offshore from some of the most prolific oil and gas regions in the world, São Tomé and Príncipe remained relatively unnoticed until recently.
ERHC, a Houston, Texas based American company and listed on the OTC Bulletin Board, was one of the first to recognize the potential in the country’s waters. ERHC now works closely with Sinopec Corp. (????????????) for offshore drilling exploration in three concessions in the area and is open to working with more Chinese partners. ERHC president and chief executive officer, Mr. Peter Ntephe, notes, “ERHC was the first international Exploration & Production (E&P) company that went to São Tomé and Príncipe in the mid-1990s to examine the possibility of the country having oil and gas reserves. At that time, there was only potential. There was very little that had been done in terms of any kind of technical studies or exploration.”
He continues, “If you look at São Tomé’s location in the Gulf of Guinea, the islands are right in the middle of some serious oil exploration and production activities, not least of which is Nigeria, just north of São Tomé, which has some of the most prolific hydrocarbon waters ever known to man. And then on the eastern side of São Tomé and Príncipe you have Gabon, Equatorial Guinea and Angola. It is already a prolific region. We were the first there because we understand the region and its business environment better than other companies. Also, the waters around São Tomé are deep, and the technology for drilling at these depths has become widely available only in the last decade.”
Indeed, ERHC’s position as the ’first-movers’ to appreciate and work on the country’s potential has given them a strong advantage. Mr. Ntephe states, “At the time when we first entered São Tomé in 1997 we had an exclusive agreement for all the oil rights that might pertain to São Tomé and Principe. Indeed, part of the agreement was for us to help set up the São Tomé and Príncipe National Petroleum Company and to become joint venture partners with the Company to do all the technical and advisory work; and we contributed technical people who assisted the government. At this time the industry was virgin in São Tomé, so it was understood that ERHC would help grow and train local capacity and know-how. However, since then the country has taken a natural look at their sovereign rights and has renegotiated ERHC’s rights etc., but we still remain as the first and major explorer in their zones.”
Being among the first companies has given them the best options. ERHC has interests in six of the nine Joint Development Zone (JDZ) blocks in which rights have been awarded. The JDZ is administered jointly by the governments of Nigeria and São Tomé and Príncipe. In São Tomé and Principe’s own Exclusive Economic Zone (EEZ) they have been awarded 100 percent working interests in two highly prospective blocks for E&P activities without having to pay signature bonuses, a potential savings for partners of an estimated $50-$100 million. Also in the EEZ they retain the options to acquire up to 15% paid working interest in another two blocks of their choice.
From this base, ERHC began to work with operating partners Sinopec Corp. and Addax Petroleum in the JDZ over four years ago. In 2009, Sinopec bought the company Addax Petroleum, which retains its structure but is wholly owned by Sinopec, making Sinopec ERHC’s significant operating partner in their blocks. Mr. Ntephe speaks enthusiastically about working with the Chinese company and his desire to work with more Chinese in the future “With Sinopec it has been an excellent working relationship. First of all, where it matters the most, they have conducted the drilling operations in a very efficient and effective manner. They have done everything within time and in budget, and they are very transparent with information sharing at a level which is more than we could have asked for. They have been incredibly transparent, cooperative and very technically competent. It has been an excellent working relationship and they are wonderful partners to work with because they believe in this cooperation.”
He continues, “We would like to work with more Chinese companies who are interested in investing in the area. I must say that Sinopec has raised the quality standards very high regarding partners to work with and has been an excellent example of working with Chinese companies. And I say this as a representative of an American company; our experience and relationship with them has been excellent.”
Regarding why Chinese companies should choose to work with ERHC, Mr. Ntephe says it is simple: “The uniqueness ERHC brings to the table is the fact that we are an American company with African know-how. As an American company, we are subject to all the regulations and corporate governance demands, and we maintain very high standards here. As a company we bring a unique knowledge of Africa as well. We know how to operate there and how to do business.”
“We have worked very well with Sinopec, and we have a great deal of experience working with Chinese. Right now is an exciting time for us, we are at a critical stage in our growth; we are in the process of pursuing a listing on the AIM of the London stock exchange. So apart from being open to partners on our projects we are open to institutional investors as well.”
For more information: www.erhc.com
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