ERHC Energy Inc (ERHE)

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Scarce rigs delay JDZ work By Upstream staff




A shortage of drilling rigs could delay Chevron from drilling its first exploration well in Nigeria and Sao Tome's shared offshore region until next year.


"We will probably drill the first well next year," said a company spokesperson. "We may get a slot this year but I doubt it. Rig supply is tight."

The delay extends a prolonged wait for the oil industry to see if the Nigeria-Sao Tome waters will yield the types of significant discoveries previously mad in the Gulf of Guinea.

Rig rates have been boosted by an increase in drilling activity in West Africa, leaving rig availability scare, the Chevron source said.

Nigeria and Sao Tome signed an historic oil exploration deal with a Chevron-led consortium in February, marking the first exploration deal for Sao Tome.

The production sharing agreement pertains to a block in the Joint Development Zone, an area created in 2000 to administer the previously disputed waters between the two countries.

The consortium won exploration rights to the block with a $123 million bid in an October 2003 bidding round.

Chevron holds 51% of the block's equity, ExxonMobil has 40% and Dangote Energy Resources owns 9%.