More problems look set to afflict the joint development zone between Nigeria and Sao Tome and Principe, with US Devon Energy's withdrawal from Block 2. The move is a blow to the authorities, who had struggled to attract majors and credible independents as investors.
Devon was in a consortium with US Pioneer and Nigerian-owned, US-listed ERHC Energy that won 65% of Block 2, deemed the most attractive of the six blocks on offer in the second round (EC Jun.3,p10). But it says the small stake it was allocated "was not big enough to warrant our participation." Devon is also rumored to have fallen out with ERHC Energy, controlled by powerful Nigerian entrepreneur Emeka Offor, and to have resented having to deal with so many block partners. The other partners -- which all have powerful connections in Nigeria's political elite -- include Hatman (10%), Foby Engineering (5%) and Momo Oil and Gas (5%).
Such problems were anticipated by Sao Tome's own regulator, the National Petroleum Agency, in mid-May (EC May13,p9).
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